Telehealth company HealthRight charged in $1B fraud scheme

Businessman in handcuffs with his back turned
HealthRight CEO Scott Riox pleaded guilty to felony conspiracy charges in a fraud case involving compound pharmacies. (Getty/Image Source)

The CEO of the telemedicine company HealthRight was charged alongside several compounding pharmacies for a $1 billion fraud scheme in which the company assisted with a scheme to bill insurers for marked-up pain creams and marketed other bogus supplements to patients.

HealthRight CEO Scott Roix pleaded guilty to felony conspiracy charges brought by the Department of Justice. Roix and the company also pleaded guilty to conspiring to commit wire fraud associated with a telemarketing scheme to sell dietary supplements, skin creams and testosterone to patients.

An indictment filed by federal prosecutors against four Florida men that own seven different compounding pharmacies alleges the executives deceived "tens of thousands of patients" and more than 100 doctors to defraud insurers, including Blue Cross Blue Shield of Tennessee, out of $931 million. The insurers ultimately paid out $174 million in fraudulent claims.

Free Daily Newsletter

Like this story? Subscribe to FierceHealthcare!

The healthcare sector remains in flux as policy, regulation, technology and trends shape the market. FierceHealthcare subscribers rely on our suite of newsletters as their must-read source for the latest news, analysis and data impacting their world. Sign up today to get healthcare news and updates delivered to your inbox and read on the go.

In a statement, BCBS Tennessee said approximately $2 million in fraudulent claims were filed with the company. 

As part of the scheme, HealthRight solicited insurance coverage information and prescriptions from patients across the country for prescription pain creams. Telemedicine physicians approved the prescriptions without knowing that several compounding pharmacies were marking up the prices of the drugs, which was billed to BCBS of Tennessee. 

RELATED: After explosion of compounded drug fraud, legal experts say party's over

Separately, Riox and HealthRight used the company's telemarketing facilities to sell millions of dollars worth of fraudulent products through "concocted claims of efficacy and intentionally deficient customer service designed to stall consumer complaints."

According to its website, HealthRight connects patients with "licensed medical providers and therapeutic solutions when you need them most."

"HealthRight is a next generation health care company committed to helping people with acute or chronic health conditions get relief or treatment, fast," the company's website states.

Roix faces a statutory maximum of five years in prison for each conspiracy charge. The other four pharmacy owners—Andrew Assad, Peter Bolos, Michael Palso and Larry Everett Smith—face up to 33 years in prison. The DOJ is also seeking a forfeiture of $154 million. 

Compound pharmacies have been a hot spot for massive fraud schemes over the last several years. A recent report by the Office of Inspector General flagged concerns about the industry, noting that it warrants further scrutiny from federal officials.

Telemedicine companies, on the other hand, have largely steered clear of fraud enforcement. Monday's indictment represents a rare pockmark for the industry. 

Editor's Note: The original article misstated the amount of fraudulent claims filed with BCBS Tennessee. The article has been updated to reflect the accurate figure.