Photo: Diego M. Radzinschi/ALM.

Amid the federal government's crackdown on compounding pharmacy abuse, the owner of a Florida pharmacy that prosecutors say was at the center of a $100 million scheme involving  compounded prescription medications has pleaded guilty to conspiracy to commit health care fraud.

Nicholas Borgesano Jr., 45, of New Port Richey, Florida, also pleaded guilty Monday in Tampa federal court to conspiracy to engage in monetary transactions involving criminally derived property. A sentencing date before U.S. District Judge James Moody Jr. of the Middle District of Florida has not yet been scheduled.

Borgesano is represented by Page A. Pate of Pate & Johnson in Atlanta. An email to his office for comment was not immediately returned.

According to the U.S. Department of Justice, Borgesano and his alleged co-conspirators submitted false and fraudulent reimbursement claims for the compounded medications such as pain and scar creams to private insurance companies, as well as to Medicare and TRICARE, the medical program that provides health insurance to members of the military. Seven other defendants, all from Florida, have already pleaded guilty to conspiracy to commit health care fraud for their roles in the scheme, the DOJ said.

Compounding pharmacies mix individual ingredients to customize prescriptions in dosage and strength for individual patients, instead of dispensing manufactured medications. The market for compounded medications has been growing in recent years, according to pharmacy industry research. Compounding pharmacies also were targeted in recent years in a U.S. Food and Drug Administration crackdown after regulators found unsafe practices at some facilities during an investigation prompted by a deadly outbreak of meningitis traced to one such pharmacy in New England. A pharmacist in the New England facility was acquitted last month on murder charges in connection with patient deaths in 2012 from mold-contaminated drugs but convicted of mail fraud and racketeering.

Borgesano admitted that he and his co-conspirators manipulated billing codes in the reimbursement claims, and submitted claims for pharmaceutical ingredients they did not have, according to prosecutors. They also paid kickbacks and bribes in exchange for prescriptions and patient-identifying information, including to a physician who allegedly signed prescriptions for patients he never saw, the DOJ said.

The main hub of Borgesano's operation was his New Port Richey pharmacy, A to Z Pharmacy. But he also used other pharmacies he owned in his allegedly fraudulent scheme, including: Havana Pharmacy, Medplus/New Life Pharmacy and Metropolitan Pharmacy, all of Miami and Jaimy Pharmacy and Prestige Pharmacy, both of Hialeah, Florida.

The case is the latest in a government crackdown on compounding pharmacy abuse, due in large part to TRICARE's significantly higher reimbursement than other health insurers' reimbursements for compounded medications, said Nick Oberheiden, managing partner at Dallas-based Oberheiden & McMurrey.

From 2013-15, federal investigators uncovered about $2 billion—$500 million of it occurring in Florida—in fraudulent prescription compounding claims to TRICARE nationally, and civil settlements and criminal indictments followed.

In August, a St. Augustine, Florida, pharmacy owner pleaded guilty to health care fraud in connection with his role in a fraudulent compounding pharmacy scheme. And in 2015, four Florida pharmacies agreed to pay a combined $12.8 million to settle civil allegations that they bilked TRICARE for compounded creams and gels.

Last month, a Gulfport, Mississippi, physician was charged in a 16-count federal indictment for fraud against TRICARE for prescribing medically unnecessary compounds, some including ketamine, an anesthetic that is sometimes abused. He allegedly wrote prescriptions without examining patients and had the prescriptions filled by a Hattiesburg, Mississippi-based compounding pharmacy, according to a Justice Deptartment news release.

Given the increased scrutiny, Oberheiden said compounding pharmacies “need to be careful if that's your business plan. You may want to think twice.”

Photo: Diego M. Radzinschi/ALM.

Amid the federal government's crackdown on compounding pharmacy abuse, the owner of a Florida pharmacy that prosecutors say was at the center of a $100 million scheme involving  compounded prescription medications has pleaded guilty to conspiracy to commit health care fraud.

Nicholas Borgesano Jr., 45, of New Port Richey, Florida, also pleaded guilty Monday in Tampa federal court to conspiracy to engage in monetary transactions involving criminally derived property. A sentencing date before U.S. District Judge James Moody Jr. of the Middle District of Florida has not yet been scheduled.

Borgesano is represented by Page A. Pate of Pate & Johnson in Atlanta. An email to his office for comment was not immediately returned.

According to the U.S. Department of Justice, Borgesano and his alleged co-conspirators submitted false and fraudulent reimbursement claims for the compounded medications such as pain and scar creams to private insurance companies, as well as to Medicare and TRICARE, the medical program that provides health insurance to members of the military. Seven other defendants, all from Florida, have already pleaded guilty to conspiracy to commit health care fraud for their roles in the scheme, the DOJ said.

Compounding pharmacies mix individual ingredients to customize prescriptions in dosage and strength for individual patients, instead of dispensing manufactured medications. The market for compounded medications has been growing in recent years, according to pharmacy industry research. Compounding pharmacies also were targeted in recent years in a U.S. Food and Drug Administration crackdown after regulators found unsafe practices at some facilities during an investigation prompted by a deadly outbreak of meningitis traced to one such pharmacy in New England. A pharmacist in the New England facility was acquitted last month on murder charges in connection with patient deaths in 2012 from mold-contaminated drugs but convicted of mail fraud and racketeering.

Borgesano admitted that he and his co-conspirators manipulated billing codes in the reimbursement claims, and submitted claims for pharmaceutical ingredients they did not have, according to prosecutors. They also paid kickbacks and bribes in exchange for prescriptions and patient-identifying information, including to a physician who allegedly signed prescriptions for patients he never saw, the DOJ said.

The main hub of Borgesano's operation was his New Port Richey pharmacy, A to Z Pharmacy. But he also used other pharmacies he owned in his allegedly fraudulent scheme, including: Havana Pharmacy, Medplus/New Life Pharmacy and Metropolitan Pharmacy, all of Miami and Jaimy Pharmacy and Prestige Pharmacy, both of Hialeah, Florida.

The case is the latest in a government crackdown on compounding pharmacy abuse, due in large part to TRICARE's significantly higher reimbursement than other health insurers' reimbursements for compounded medications, said Nick Oberheiden, managing partner at Dallas-based Oberheiden & McMurrey.

From 2013-15, federal investigators uncovered about $2 billion—$500 million of it occurring in Florida—in fraudulent prescription compounding claims to TRICARE nationally, and civil settlements and criminal indictments followed.

In August, a St. Augustine, Florida, pharmacy owner pleaded guilty to health care fraud in connection with his role in a fraudulent compounding pharmacy scheme. And in 2015, four Florida pharmacies agreed to pay a combined $12.8 million to settle civil allegations that they bilked TRICARE for compounded creams and gels.

Last month, a Gulfport, Mississippi, physician was charged in a 16-count federal indictment for fraud against TRICARE for prescribing medically unnecessary compounds, some including ketamine, an anesthetic that is sometimes abused. He allegedly wrote prescriptions without examining patients and had the prescriptions filled by a Hattiesburg, Mississippi-based compounding pharmacy, according to a Justice Deptartment news release.

Given the increased scrutiny, Oberheiden said compounding pharmacies “need to be careful if that's your business plan. You may want to think twice.”