A West New York financial advisor was convicted on 11 counts at trial for a $4 million healthcare fraud conspiracy, U.S. Attorney Philip Sellinger announced.
By John Heinis/Hudson County View
Kaival Patel, 54, of West New York, was convicted yesterday of one count of conspiracy to commit wire fraud and health care fraud, four counts of health care fraud, one count of conspiracy to commit money laundering by transacting in criminal proceeds, and five counts of money laundering by transacting in criminal proceeds following an 11-day trial before U.S. District Court Judge Robert B. Kugler.
“This defendant lined his own pockets by taking advantage of health insurance plans for New Jersey state and local government employees, defrauding them of millions of dollars by conspiring to obtain reimbursements for medically unnecessary compound prescription medications. Together with our law enforcement partners, we will continue to investigate and prosecute those who abuse and defraud the health care system,” Sellinger said in a statement.
Compounded medications are specialty medications mixed by a pharmacist to meet the specific medical needs of an individual patient. Compounded medications require a prescription from a physician.
Patel created and operated a company called ABC Healthy Living LLC to market compound prescription medications.
Patel and his conspirators learned that certain state and local government employees had insurance that would reimburse up to thousands of dollars for a one-month supply of certain compound medications such as vitamins, scar creams, pain creams, libido creams, and acid reflux medications.
Patel and a conspirator approached Patel’s family member, a medical doctor who owns and operates a clinic in Newark, and convinced him to authorize prescriptions for the compound medications for patients who had no medical need for the prescriptions.
Patel received commissions for the compound medication prescriptions.
They were both charged bu the U.S. Attorney’s Office in January 2022.
“Filing false compound medication claims and pocketing the reimbursements isn’t a new scheme. For years now, the FBI Newark and our law enforcement partners have doggedly investigated and brought to justice dozens of others who defrauded healthcare companies, state and federal government agencies, and taxpayers,” added FBI – Newark Special Agent in Charge James E. Dennehy.
“Yet, these criminals don’t seem to learn the lessons of those who tried to steal what isn’t theirs and get rich off the backs of the hardworking public. Our hope is anyone thinking of using a similar plan realizes they will get caught, and they will go to federal prison along with Patel.”
Additionally, Patel and his conspirators paid a group of corrections officers to go to Patel’s family member’s medical practice for the purpose of receiving fraudulent prescriptions.
Furthermore, he also conspired with a compounding pharmacist to add unnecessary ingredients to the compound medications to further increase their cost and augment his illicit profits.
Patel engaged in a series of financial transactions to receive proceeds from the health care fraud and wire fraud conspiracy. To date, approximately 47 people have been convicted or pleaded guilty in the overarching conspiracy.
On the count of conspiracy to commit wire fraud and health care fraud, Patel faces a maximum penalty of 20 years in prison and a fine of $250,000 fine, or twice the gross pecuniary loss from the offense, whichever is greatest.
On each of the remaining 10 counts, he faces a maximum penalty of 10 years in prison and a $250,000 fine, or twice the gross pecuniary gain or loss from the offense, whichever is greatest.
His sentencing is scheduled for April 10th, 2024.
