Telehealth startup Done's CEO and clinical president arrested, charged with fraud

The CEO and clinical president of telehealth startup Done have been arrested and charged with fraud, accused by federal authorities of participating in a scheme to distribute Adderall online.

Ruthia He, the founder and CEO of Done Global Inc., was arrested Thursday in Los Angeles and David Brody, the clinical president of Done Health, was arrested in San Rafael, California, the Department of Justice said in a press release.

The two executives were charged with conspiring to commit healthcare fraud in connection with the submission of false and fraudulent claims for reimbursement for Adderall and other stimulants, the DOJ said.

If convicted, He and Brody each face a maximum penalty of 20 years in prison on the conspiracy to distribute controlled substances and distribution of controlled substances counts, according to the DOJ.

Messages sent to Done weren't immediately returned.

Done marketed itself as a membership-based platform that connects patients seeking treatment for attention-deficit hyperactivity disorder (ADHD) with qualified clinicians.

According to the DOJ, He and Brody arranged the prescription of 40 million pills, including Adderall as well as other stimulants, generating more than $100 million in revenue.

“As alleged, these defendants exploited the COVID-19 pandemic to develop and carry out a $100 million scheme to defraud taxpayers and provide easy access to Adderall and other stimulants for no legitimate medical purpose,” said Attorney General Merrick B. Garland in a statement. “Those seeking to profit from addiction by illegally distributing controlled substances over the internet should know that they cannot hide their crimes and that the Justice Department will hold them accountable.”

“The individuals charged today allegedly disregarded the first rule of medical care—do no harm—in order to maximize profits,"  said Secretary of Homeland Security Alejandro N. Mayorkas.

According to court documents, He and Brody allegedly conspired with others to provide easy access to Adderall and other stimulants in exchange for payment of a monthly subscription fee. The indictment alleges that the conspiracy’s purpose was for the defendants to unlawfully enrich themselves by, among other things, increasing monthly subscription revenue and thus increasing the value of the company. 

He and Brody with allegedly obtained subscribers by targeting drug seekers and spending tens of millions of dollars on deceptive advertisements on social media networks, according to federal authorities.

They also allegedly intentionally structured the Done platform to facilitate access to Adderall and other stimulants, including by limiting the information available to Done prescribers, instructing Done prescribers to prescribe Adderall and other stimulants even if the Done member did not qualify, and mandating that initial encounters would be under 30 minutes, the DOJ claims.

Federal authorities also claim that in order to maximize profits, He put in a place an “auto-refill” function that allowed Done subscribers to elect to have a message requesting a refill be auto-generated every month. He wrote that Done sought to “use the comp structure to dis-encourage follow-up” medical care by refusing to pay Done prescribers for any medical visits, telemedicine consultation, or time spent caring for patients after an initial consultation, and instead paying solely based on the number of patients who received prescriptions.

The case, filed in the U.S. District Court for the Northern District of California, marks the first time the Justice Department has alleged criminal drug distribution related to telemedicine prescribing through a digital health company, according to Principal Deputy Assistant Attorney General Nicole M. Argentieri, head of the Justice Department’s Criminal Division.

“As alleged in the indictment, the defendants provided easy access to Adderall and other stimulants by exploiting telemedicine and spending millions on deceptive advertisements on social media," Argentieri said in a statement. "As these charges make clear, corporate executives who put profit over the health and safety of patients—including by using technological innovation—will be held to account.”

In many cases, Done Global prescribed ADHD medications when they were not medically necessary, DEA Administrator Anne Milgram said in the press release.

“The defendants in this case operated Done Global Inc., an online telehealth website that prescribed Adderall and other highly addictive medications to patients who bought a monthly subscription. The defendants allegedly preyed on Americans and put profits over patients by exploiting telemedicine rules that facilitated access to medications during the unprecedented COVID-19 public health emergency," Milgram said.

The Wall Street Journal reported in September 2022 that DEA agents were investigating Done’s practices for prescribing controlled substances. The investigation was sparked by WSJ articles describing how some Done clinicians felt pressured to prescribe stimulants like Adderall. One patient died following a Done prescription, the WSJ reported.

Federal authorities allege that He and Brody allegedly persisted in the conspiracy even after being made aware that material was posted on online social networks about how to use Done to obtain easy access to Adderall and other stimulants, and that Done members had overdosed and died. They also allegedly concealed and disguised the conspiracy by making fraudulent representations to media outlets to forestall government investigations and action.

The two executives, along with others, also allegedly conspired to defraud pharmacies into dispensing Adderall and other stimulants to Done members in violation of their corresponding responsibility and to get Medicare, Medicaid and commercial insurers to pay for the cost of these drugs.

Medicare, Medicaid and commercial insurers paid in excess of approximately $14 million, the DOJ alleges.

He and Brody also face charges of conspiring to obstruct justice, when, in anticipation of a subpoena being issued, allegedly deleted documents and communications and used encrypted messaging platforms instead of company email. The two executives also failed to produce documents in response to a subpoena issued to Done by a federal grand jury, the DOJ claimed. 

The DEA also alleged that telehealth and digital pharmacy company Truepill unlawfully dispensed thousands of prescriptions for stimulant medications such as Adderall used in the treatment of ADHD. In December 2022, the agency served the startup with an order to show cause, which is an administrative action to determine whether a DEA certificate of registration should be revoked. 

Done’s primary competitor, Cerebral Inc., received a grand jury subpoena from the Justice Department for “possible violations” of the Controlled Substances Act in May 2022. The Federal Trade Commission also was looking into whether the company engaged in deceptive or unfair practices related to advertising or marketing of mental health services.

Cerebral stopped prescribing controlled substances in 2022.

Under a FTC order, the company had to pay $7 million in fines for improper health data sharing and its deceptive cancelation practices.