Evidence found sufficient to convict defendant of conspiracy to commit healthcare fraud but wrong sentence imposed

Grow formed a company and teamed up with a compounding pharmacy called Patient Care America to market three of its compounded medications: a pain cream, a scare cream, and a metabolic vitamin. He recruited two sales representatives and paid them using a tiered multilevel pyramid structure which meant that commissions for the sales representatives were based on their own referrals and referrals made by representatives brought in by the representatives they brought in. He also recruited patients instead of doctors and used telemedicine companies to prescribe the creams and vitamins to patients. Some recruited patients were paid commissions for just ordering their own creams and vitamins and set up a phony survey program where Grow’s recruited patients were paid $1,000 per month to try the creams and vitamins and write about their experiences.   The only purpose of the survey was to refer more beneficiaries and get paid commissions. Nothing was done with the results of the survey. Grow was charged and convicted of conspiracy to commit healthcare and wire fraud, committing healthcare fraud, conspiracy to receive and pay kickbacks.

Grow challenged the sufficiency of the evidence claiming that there was no evidence that any claim made to Patient Care was fraudulent and in any event he did he did not know of any fraud. The Court found otherwise. Recruits were prescribed and their insurance was billed for pain creams, scar creams and vitamins that were not medically necessary. Multiple patients testified that they never spoke to a doctor before receiving the creams and many said they did not need the creams. Grow’s argument that their prescriptions were provided pursuant to valid prescriptions issued by doctors who lawfully consulted with patients did not prevail.

The appeals court found there was sufficient evidence of federal criminal healthcare fraud and conspiracy to commit healthcare fraud even where a doctor prescribes the medicine because it found that the patients were receiving medically unnecessary treatments and prescription. Evidence that supported the conviction was this. First there was evidence that Grow and his representatives told telemedicine doctors what to prescribe before the doctors consulted with recruits. Second, there was evidence that Grow regularly complained to the telemedicine company that their doctors were not prescribing the most expensive prescription options. Third, there was evidence that Grow pushed Patient Care to use a premium ingredient in its compounded medications that was vastly more expensive but identical to the regular inexpensive ingredient. Fourth, there was evidence that Grow made a huge profit from the fraud, nearly $20 million in gross profits. Fifth, there was evidence that Grow and Patient Care tried to conceal aspects of their scheme to avoid showing patient brokering and payments of kickbacks. Finally, there was evidence Grow paid his representatives to recruit more people to order creams and vitamins.

The appellate court did reverse Grow’s sentence of 20 years on count one, which charged a dual object of conspiracy to commit healthcare fraud and wire fraud, because the maximum sentence for conspiracy to commit healthcare fraud was 10 years. The jury only returned a general verdict on count one and was instructed that it could return a guilty verdict if it found that Grow committed either or both objects of the conspiracy. The appeals court found that it did not know whether the jury found Grow guilty of conspiracy to commit healthcare fraud, conspiracy to commit wire fraud, or both.