Pharmaceutical sales rep admits guilt in massive health insurance scam

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A New Jersey pharmaceutical sales representative is the 11th person to admit his participation in a wide-ranging insurance scam that defrauded state and health insurers out of millions of dollars.

On Monday, Andrew Gerstel, 39, of Galloway, copped to defrauding state health benefits programs and other insurers out of nearly $500,000 by submitting fraudulent claims for medically unnecessary prescriptions as part of a conspiracy, federal and state prosecutors said in a statement.

Gerstel faces up to 10 years in prison and could be fined as much as $250,000 when he is sentenced Feb. 26. He must forfeit $184,389.05 he was paid for taking part in the scheme and pay restitution of at least $483,946.72.

Between January 2015 and April 2016, Gerstel targeted people with generous health plans, such as teachers, firefighters, local and state police and other state employees, and got them to agree to order unnecessary prescriptions from an unnamed out-of-state compounding pharmacy, officials said. In exchange, they received cash.

The doctors would then sign prescriptions without ever evaluating patients, prosecutors have said. The prescriptions were filled by the compounding pharmacy, and the medications prescribed were those that offered the highest-possible reimbursement, according to prosecutors.

The pharmacy’s benefits administrator, who has not been named but is employed by the state benefits program, then reimbursed the claims, paying up to thousands of state dollars for each prescription.

Roughly half of the $50 million that the pharmacy benefits administrator paid to the compounding pharmacy was for prescriptions that the conspirators arranged.

Gerstel reportedly received a percentage of the money paid to the compounding pharmacy.

Mixed specially for individual patients, drugs from compounding pharmacies cost far more than regular drugs. Doctors typically order prescriptions from a compounding pharmacy if a patient is allergic to a component of an existing medication.

Examples of compound medications include vitamin combinations, pain creams, scar creams, antifungal creams, and libido creams.

Matthew Tedesco, Robert Bessey, Michael Pepper, Thomas Hodnett, Steven Urbanski, Dr. John Gaffney, Judd Holt, George Gavras, Richard Zappala, and Michael Neopolitan have previously pleaded guilty as part of the scheme and await sentencing.

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