On November 24, 2020, the U.S. Court of Appeals for the Eleventh Circuit affirmed a Georgia podiatrist’s conviction and sentence for his alleged role in an illegal kickback scheme involving TRICARE, a federal program for members of the military and their families. The Defendant, Dr. Alap Shah (“Shah”), was convicted by a jury of count one, conspiring to receive health care kickbacks or defraud the United States, and counts three and four, receiving kickbacks in August and September 2014. The jury acquitted him on count two, receiving a kickback in July 2014. The district court sentenced him to 36 months of incarceration on each count, to run concurrently, and ordered him to pay $55,340 in restitution.
Shah sometimes prescribed compounded medicines to his patients. Compounded medicines are custom-formulated drugs that can vary from off-the-shelf drugs in strength, delivery method, or combinations. A compounded medicine might be a cream that combines three pain-reducing drugs ordinarily produced in pill form at a lower strength than available off the shelf. Specialized pharmacies produce compounded medicines, which are much more expensive than off-the-shelf prescription medications. A single tube of a compounded cream can cost $15,000 or more.
Shah and about 20 others allegedly participated in a kickback conspiracy that involved writing prescriptions for compounded drugs. Each of them faxed prescriptions for compounded drugs to a company called PGRx Group, which in turn directed a compounding pharmacy to fill the prescriptions. The pharmacy paid PGRx Group a kickback, usually around 50 percent of its profits, for each prescription PGRx Group referred to it. PGRx Group passed part of that kickback on to the prescribing doctor.
Shah allegedly received his share of the profits as a flat monthly payment of $5,000, and some other doctors received a percent commission from the prescriptions they wrote. PGRx Group disguised the nature of the payments by hiring the doctors to be “medical directors,” by calling the payments speaker fees for promoting PGRx Group and compounded drugs at professional events, and by routing payments to the prescribing doctors’ family members or employees.
Shah performed none of his duties under his contract with PGRx Group (he did not even know where PGRx Group was located). Nonetheless, PGRx Group always paid Shah $5,000 a month.
Shah prescribed compounded medications far more often after he signed the contract with PGRx Group than before he signed the contract. In a six-month period before the conspiracy began—from August 2013 to February 2014—Shah wrote 26 prescriptions for compounded medications. But in a six-month period during the conspiracy—from August 2014 to February 2015—he wrote 209 prescriptions for compounded medications.
Shah allegedly continued participating in the conspiracy until around May 2015, when TRICARE made the conspiracy less profitable by instituting a prior-authorization requirement for compounded drugs. Shah received checks from PGRx Group totaling $55,350.43. The prescriptions he wrote during the conspiracy cost TRICARE more than a million dollars.
The Federal Appellate Court held: “The district court erred by instructing the jury that the government had to prove Shah accepted the payments at least in part because they were made in return for the prescriptions he wrote. No such proof was required. But the government has met its burden of proving beyond a reasonable doubt that the error did not harm Shah. The erroneous instruction required the government to prove more than the statute required, so if anything, the error worked to Shah’s advantage.”
Source United States of America v. Alap Shah, USCA11 Case: 19-12319.
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