A Western New York man and a Newark doctor are accused of defrauding New Jersey state and local health benefit programs and other insurers out of more than $3.4 million in submitting false claims for medically unnecessary prescriptions, according to US attorney Philip Sellinger.
Kaival Patel, 53, of Western New York, and Saurabh Patel, 51, of Woodbridge, are charged in a 12-count indictment of conspiracy to commit healthcare fraud health and wire fraud, and four counts of health care fraud. Kaival Patel is also charged with conspiracy to commit money laundering, material counts of money laundering and making false statements to federal agents.
The defendants appeared on January 21 via video conference before U.S. Magistrate Judge Sharon King and were released on $250,000 by unsecured bond.
Healthcare Fraud Conspiracy
According to the indictment, Kaival Patel and his wife, referred to in the indictment as “Individual 1”, operated a company called ABC Healthy Living LLC (ABC) to market medical products and services, including prescription compound drugs.
Saurabh Patel is a doctor who owned and operated a clinic, named in the indictment as “Medical Practice 1”, in Newark. Saurabh Patel is related to Kaival Patel and Individual 1, according to Sellinger.
Paul Camarda, a pharmaceutical representative listed as a conspirator, pleaded guilty before Judge Kugler in Camden Federal Court on July 6, 2021, to healthcare conspiracy and conspiracy to launder money and obstruct justice and awaits sentencing.
Compound medications are specialty medications mixed together by a pharmacist to meet the specific medical needs of an individual patient. Although compound drugs are not approved by the Food and Drug Administration (FDA), they are properly prescribed when a physician determines that an FDA-approved drug does not meet the health needs of a particular patient, for example. example if a patient is allergic to a dye or other ingredient.
According to Sellinger, Kaival Patel, Saurabh Patel, Camarda and others learned that some state and local government employees had insurance that would reimburse up to thousands of dollars for a month’s supply of certain compound drugs. . The defendants allegedly submitted fraudulent insurance claims for compound prescription drugs to a drug benefits administrator, which provided administration services for certain insurance plans that covered state and local government employees.
The defendants directed people recruited to receive drugs from compounding pharmacies to Saurabh Patel’s medical office, which enabled him to fraudulently receive insurance payments for these patient visits and procedures. The conduct caused the benefits administrator to pay $3.4 million in fraudulent claims.
More than 20 years in prison?
The health care fraud and wire fraud conspiracy count faces a potential maximum sentence of 20 years in prison; health care fraud charges carry a potential maximum sentence of 10 years in prison; the count of misrepresentation is liable to a maximum penalty of five years in prison. All of these counts are also punishable by a fine of $250,000, or double the gain or loss of the offense, whichever is greater.
Money laundering charges carry a maximum penalty of 10 years in prison and a fine of $250,000, or twice the gross gain or loss of the offense or no more than twice the amount property of criminal origin involved in the transactions.
U.S. Attorney Sellinger credited IRS Criminal Investigation Special Agents, under Special Agent in Charge Michael Montanez in Newark; special agents from the FBI’s Atlantic City Resident Agency, under Special Agent in Charge George M. Crouch Jr. in Newark; and the Office of Inspector General of the United States Department of Labor, New York Region, under the direction of Special Agent in Charge Jonathan Mellone, the investigation leading to the indictment.
The government is represented by Assistant U.S. Attorneys Christina O. Hud and R. David Walk Jr. of the Camden Criminal Division.
The charges and allegations contained in the indictment are only charges and the defendants are presumed innocent until proven guilty.
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