Pharmacy Owners Sentenced in ‘Astonishing’ $174M Cream Scheme

A federal judge in Tennessee has sentenced two Florida men to prison after they were found guilty of an extensive telemedicine fraud that convinced pharmacy benefits managers ExpressScripts, CVS Caremark, Optum and others to authorize millions of dollars in compounded pain creams.

Peter Bolos, 44, co-owner of a Tampa-area pharmacy and the ringleader of the scheme, was sentenced to 14 years behind bars and he must pay almost $25 million in restitution, the U.S. Attorney for Eastern Tennessee said in a news release. Co-defendant Michael Palso, 48, also of Tampa, was sentenced to 33 months in prison. He, too, must repay almost $25 million, U.S. District Judge Ronnie Greer decided this week.

“The scale of the prescription-drug fraud scheme orchestrated by Bolos and his conspirators was astonishing, and the 14-year sentence reflects the seriousness of Bolos’s participation in that conspiracy,” U.S. Attorney Francis Hamilton said in a news release.

Prosecutors said the scheme defrauded public and private insurers, including Blue Cross Blue Shield of Tennessee, Medicaid and TriCare, out of $174 million dollars over a three-year period. Altogether, 14 people pleaded guilty in the operation that billed for as much as $931 million.

The fraud worked something like this: Synergy Pharmacy in Palm Harbor, Florida, and other pharmacies employed a telemarketing firm known as HealthRight to generate prescriptions for pain creams, scar creams and vitamins. The telemarketer would cold-call consumers, convincing them to accept the drugs and to provide their insurance information. The firm then paid doctors to authorize the prescriptions, even though the doctors never communicated directly with the patients, prosecutors said.

The prescriptions were for “misbranded” drugs and were invalid, with inflated prices, but were nonetheless authorized by the PBMs, the federal authorities said. The indictment can be seen here.

The prosecutions were the result of a multi-year investigation by the federal Health and Human Services agency, the Food and Drug Administration, the Postal Service and the FBI. Several of the remaining defendants, including participating pharmacies and owners, were ordered to pay restitution and to forfeit assets.