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Date: 01-01-2024

Case Style:

United States of America v. James D. Feeley

Case Number: 23-382

Judge: U.S. District Judge Esther Salas


United States District Court for New Jersey

Plaintiff's Attorney: Assistant U.S. Attorney Katherine M. Romano

Defendant's Attorney:

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Newark, New Jersey criminal defense lawyer represented the Marketing Companies Role in $24 Million Health Care Fraud and Kickback Scheme

James D. Feeley, 46, of Grafton, Ohio, pleaded guilty before U.S. District Judge Esther Salas in Newark federal court to an information charging him with conspiracy to violate the Federal Anti-Kickback statute and conspiracy to commit health care fraud.

According to documents filed in this case and statements made in court:

From June 2017 through September 2020, Feeley participated in a scheme with pharmacies, telemedicine companies, and doctors to submit false claims to health care benefit programs, including Medicare and TRICARE, based on a circular scheme of kickbacks and bribes. Feeley controlled several marketing companies though which he and his conspirators identified Medicare and TRICARE beneficiaries to target for expensive drugs. The marketing companies spoke to beneficiaries by telephone to pressure them to agree to try expensive medications, regardless of medical necessity. Company employees would deliberately conceal the name of the prescribing doctor – whom the beneficiary had never met before – to increase the likelihood that the beneficiary would agree to accept the medications. Portions of the telephone calls were recorded.

Feeley and his companies then paid kickbacks to telemedicine companies, which in turn paid kickbacks to doctors, to obtain prescriptions for the medications. Feeley transmitted to the telemedicine companies the beneficiaries’ medical information, the telephone call recording, and pre-marked prescription pads for particular drugs that would yield exorbitant reimbursements. Feeley, the marketing companies, and the pharmacies with which they had relationships chose particular drugs for the prescriptions largely based on reimbursement amount and not medical need. The doctors paid by the telemedicine companies signed the prescriptions regardless of medical necessity, often without ever speaking to the patient.

Feeley and his conspirators then directed the prescriptions to pharmacies with which Feeley and his business partner, Mark Belter, had additional kickback arrangements. The pharmacies submitted claims for reimbursement to health care benefit programs including Medicare and TRICARE, and thereafter sent a portion of the proceeds to Feeley and his companies as payment for the prescriptions generated through the conspiracy. In total, Feeley and his conspirators caused the submission of false and fraudulent claims to health care benefit programs totaling more than $24 million of prescription drugs. Belter previously pleaded guilty to an information charging conspiracy to violate the federal anti-kickback statute and conspiracy to commit health care fraud.

Feeley and his companies received kickbacks and bribes totaling more than $6 million in exchange for prescription referrals to Apogee Bio Pharm LLC, a pharmacy located in Edison, New Jersey. The principals of Apogee – William Welwart, Ethan Welwart, and Gary Kaczka – are charged with health care fraud and related offenses in a separate indictment. The charges and allegations contained in the indictment are merely accusations, and William Welwart, Ethan Welwart and Gary Kaczka are presumed innocent unless and until proven guilty.

Elan Yaish, former president of Apogee, previously pleaded guilty to an information charging conspiracy to violate the federal anti-kickback statute.

Attorney for the United States Khanna credited special agents of the FBI, under the direction of Special Agent in Charge James E. Dennehy in Newark, U.S. Department of Health and Human Services Office of Inspector General, under the direction of Special Agent in Charge Naomi Gruchacz, and U.S. Department of Defense, Office of Inspector General, Defense Criminal Investigative Service, Northeast Field Office, under the direction of Acting Special Agent in Charge Brian J. Solecki, with the investigation.

The government is represented by Assistant U.S. Attorney Katherine M. Romano of the Health Care Fraud Unit in Newark.

Outcome: The conspiracy charges are each punishable by a maximum of five years in prison, along with fines, restitution, and penalties as to both counts.

Both charges are punishable by a fine of $250,000, or twice the gross gain or loss from the offense. Sentencing is scheduled for July 9, 2024.

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