West LA pharmacy ordered to pay $4.4M for involvement in fraud scheme

A West Los Angeles pharmacy was ordered to pay restitution of more than $4.4 million Tuesday for its involvement in a health care fraud scheme that paid kickbacks to steer business its way.

The now-defunct Fusion Rx Compounding Pharmacy, which pleaded guilty through its owner last year to federal charges, was sentenced to five years of probation, restitution with an immediate payment of $70,000, and a $400 special assessment, according to the U.S. Attorney’s Office.

Navid Vahedi, who owned and operated Fusion Rx, “transformed what could have been a legitimate pharmacy into an organization with a criminal purpose,” prosecutors wrote in sentencing papers.

The court delayed sentencing for Vahedi until Feb. 7.

As a separate defendant, Vahedi, 42, of Brentwood, pleaded guilty last year to one count of conspiracy to commit health care fraud and payment of illegal remunerations.

The pharmacy was a provider of compounded drugs, which are tailor-made products that doctors may prescribe when the FDA-approved alternative does not meet the health needs of a patient.

In addition to the restitution, Vahedi agreed to forfeit $1.3 million. Under the terms of his plea agreement, Vahedi will have his pharmacist license revoked and both Vahedi and Fusion Rx will be excluded from federal health care programs such as Medicare and Medicaid.

Vahedi admitted routing millions of dollars in kickback payments through two marketers to steer prescriptions for compounded drugs to Fusion Rx. As part of the scheme, Vahedi and the marketers provided doctors with preprinted prescription script pads that offered options to maximize the amount of insurance reimbursement, federal prosecutors said.

From May 2014 to at February 2016, Fusion Rx received about $14 million in reimbursements from claims for compounded drug prescriptions, prosecutors said.

As part of its contracts with insurers, the pharmacy was obligated to collect co-payments from patients. But because the co-payments might discourage patients from requesting the costly prescriptions, Fusion Rx failed to collect co-payments with any regularity, and in some cases gave patients gift cards to offset the co-payment amounts, according to court documents.

After an audit threatened to expose the scheme, Vahedi used Fusion Rx funds to purchase American Express gift cards, which were used to make co-payments for some prescriptions without patients’ knowledge, prosecutors said.

Fusion Rx then submitted claims on those prescriptions to insurers, falsely representing that patients had paid the required co-payments.

The two marketers involved in the scheme — Joshua Pearson, 41, of St. George, Utah, and Joseph Kieffer, 40, of West Los Angeles — previously pleaded guilty.

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