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Ten Physicians and Local Execs Indicted in Pharmacy Kickback Scheme

Physicians across the state were allegedly recruited to direct prescriptions to pharmacies paying kickbacks to the doctors for the referrals.
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Courtesy: iStock

Update: The article formerly misidentified the specialization of the physicians included in the indictment.

Several podiatrists and local businessmen are among the 14 people indicted in a pharmaceutical kickback scheme in the Northern District of Texas this week. The physicians received bribes and kickbacks from pharmacies for referring prescriptions to those pharmacies.

The indictment describes a familiar scheme. The indictment describes a scheme that began in 2014 where pharmacies paid physicians through several entities and people to direct or refer prescriptions to be filled at those pharmacies. The pharmacies would identify lucrative prescriptions, recruit physicians to prescribe them and direct them back to the pharmacies in exchange for a portion of profits on those prescriptions. Many of the prescriptions were for expensive pain creams. The payments were proportional to the amount of prescriptions received and paid through business arrangements meant to conceal the payment’s nature.

Dallas resident Amir Mortazavi is among the indicted and has held several C-suite roles at Next Health, a holding company controlling numerous healthcare entities, including pharmacies. Arvin Zenali was another leader at Next Health and was also indicted. A 2021 Paper City article features Mortazavi and his wife discussing their co-owned Vitalyc MedSpa and its body sculpting technology.

The indictment describes how another man, Vincent Woodlee, would use his company, Med Left, to conceal and funnel bribes and kickbacks from the pharmacies to physicians or those close to the physicians. According to the indictment, Mortazavi, Zenali, Woodlee, and others agreed to share the profits of the expensive prescriptions filled at Next Health’s pharmacies with physicians.

Court documents claim that around half of the profits were retained by the pharmacy, and Med Left would take its cut of the payment. The rest would go to other management service organizations (MSOs), which would also take a portion of the funds and pay an entity controlled by Dr. Robert Leisten, listed as a podiatrist at Memorial Hermann Health System in Houston. Leisten would then pay other physicians. Other MSOs, called Hexamed and Eagle Ridge, would also pay physicians kickbacks.

The scheme was exposed when a confidential source met with Mortazavi and Zeinali and claimed to represent physicians interested in receiving kickbacks for their prescriptions. The source recorded the 2018 meeting, and Mortazavi and Zeinali insisted they would only agree to pay the doctors through Woodlee’s MSOs. The following week, the source met with Woodlee, who explained how the bribes and kickbacks would work.

Later that month, Mortazavi and three doctors met for dinner to discuss a change to their business model and agreed that the MSO would receive a weekly report that tracked each physician by the patient, number of prescriptions, reimbursement payments, and prescription costs. The indictment contains emails and messages about how much physicians should be paid, how the payments would be tracked, and which prescriptions would receive more reimbursement. At one point, someone affiliated with one of the MSOs asked Zeinali which drugs physicians “can get a good reimbursement on,” according to the indictment.

The kickbacks were often disguised as legitimate returns on investments in the pharmacies. The physicians would purchase a percentage of the pharmacy for a nominal fee, sometimes as little as $1,000. The indictment says that referring prescriptions to the pharmacy was required for ownership and that 100 percent of the pharmacy’s profits resulted from physician owners. Those profits were shared with the prescribing doctors.

The owners of Next Health, Andrew Hillman and Semyon Narosov, pleaded guilty to charges connected with the scheme in 2018 and were also charged and pleaded guilty to conspiracy and bribe charges connected to the Forest Park Medical Center healthcare fraud. They were sentenced to several years in prison for both crimes. In a separate case, Woodlee pleaded guilty to a conspiracy to give and receive kickbacks.

The ten indicted physicians include several podiatrists, which are not regulated by the Texas Medical Board like other physicians in this state, but are considered physicians by the Centers for Medicare and Medicaid Services. They are accused of referring prescriptions to Next Health’s pharmacies and receiving kickbacks for doing so.

The details of who was indicted and for what are below, from the release from the U.S. Attorney’s Office.

“Medical doctors Robert Leisten, Amy Haase, Arnold Farbstein, Barry Weinstein, Eric Berkman, Jorge Cuz, Katherine McCarty, James Ellis, and David Wolf; executives Amir Mortazavi and Arvin Zeinali; and Management Service Organizations (MSOs) Trinity Champion Healthcare Partners, LLC and Hexamed Business Solutions, LLC were charged with conspiracy to violate the Travel Act by violating the Texas Commercial Bribery Statute and conspiracy to deny patients their right to honest services; and with conspiracy to commit money laundering. Medical doctor Walter Strash was charged with conspiracy to violate the Travel Act by violating the Texas Commercial Bribery Statute and conspiracy to deny patients their right to honest services.”

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Will Maddox

Will Maddox

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Will is the senior writer for D CEO magazine and the editor of D CEO Healthcare. He's written about healthcare…

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