Jury Convicts Doctor, Pharmacist, Marketer in Health Care Fraud Scheme

A doctor, a pharmacist, and a marketer were convicted today in federal court in Detroit for health care fraud and controlled substance distribution, U.S. Attorney Barbara L. McQuade announced today.

McQuade was joined in the announcement by Acting Special Agent in Charge James V. Allen, Drug Enforcement Administration, Detroit Division; Paul R. Abbate, Special Agent in Charge, Federal Bureau of Investigation; and Lamont Pugh, III, Special Agent in Charge, Department of Health and Human Services Office of Inspector General (HHS-OIG).

The jury returned guilty verdicts against Dr. Carl Fowler, M.D., 61, of West Bloomfield; pharmacist Mukesh Khunt, 34, of Toronto, Ontario, Canada; and Michael Thoran of Detroit. Defendants Fowler and Thoran were convicted on all three of the counts with which they were charged—conspiracies to commit health care fraud, to distribute controlled substances, and to pay or receive health care kickbacks. Defendant Khunt was convicted of six of the seven counts with which he was charged, health care fraud conspiracy, conspiracy to distribute controlled substances, and two counts health care fraud and two counts of controlled substances distribution. The jury was unable to reach a verdict on the seventh count charging a conspiracy to pay or receive health care kickbacks.

McQuade stated, “Law enforcement investigators in metro-Detroit are aggressively investigating health care fraud and detecting abuses by doctors and pharmacists. We hope that prosecutions like this one will deter medical professionals from stealing taxpayer funds intended for health care.” The evidence presented during the three-week trial demonstrated that, from approximately January 2006 through August 2011, Canton Pharmacist Babubhai Patel owned and controlled 26 pharmacies (termed “the Patel Pharmacies” at trial), which operated in and around Detroit. The evidence also showed that Babubhai Patel’s model for turning a profit at his pharmacies was based upon large-scale health care fraud and the diversion of controlled substances. Babubhai Patel paid cash kickbacks and other things of value to physicians in exchange for those physicians writing prescriptions for expensive medications, without regard to medical necessity, that could be billed to Medicare, Medicaid, or a private insurer through one of the Patel Pharmacies. Physicians affiliated with Babubhai Patel would also write prescriptions for controlled substances for their patients, again regardless of medical necessity, which would then be filled at one of the Patel Pharmacies. These controlled substances were distributed to patients and patient recruiters as a kickback in exchange for the patients using a Patel Pharmacy. Pharmacists at the Patel Pharmacies would increase the pharmacies’ profits by billing insurers for medications never actually distributed to patients.

The evidence presented at trial showed that Fowler was one of the physicians to whom Babubhai Patel paid bribes and kickbacks in exchange for referrals of prescriptions. In exchange, Dr. Fowler wrote numerous prescriptions for expensive medications, without regard to medical necessity, that could be filled at one of the Patel Pharmacies. He also wrote unlawful prescriptions for narcotic drugs in Schedules II-V, including Oxycontin and oxycondone, which were resold on the street market.

Evidence also demonstrated that Khunt, a pharmacist in Babubhai Patel’s organization, billed Medicare, Medicaid, and private insurers for expensive medications he never dispensed to patients. He also knowingly filled prescriptions for scheduled controlled substances such as vicodin that were never intended for the patients but which were resold by marketers on the street market.

The evidence showed that Thoran was a marketer who recruited patients who were seen by cooperating doctors or clinics. After unlawful prescriptions for controlled substances were written and filled at the pharmacies, Thoran would take possession of the controlled drugs in order to sell them on the street market.

These defendants are three of 39 individuals who have been charged with offenses relating to their involvement with Babubhai Patel’s pharmacy network. All but three defendants have now been convicted of felonies arising from their involvement with Babubhai Patel; 24 of those defendants entered guilty pleas, and 12, including the three defendants today, have been convicted after trial. Defendant Babubhai Patel was convicted at a trial in August 2012; he is serving a 17-year prison sentence. One defendant remains a fugitive, while two defendant’s cases remain pending, with a trial date set for July, 2014.

The case was prosecuted by Assistant United States Attorneys John K. Neal and Wayne F. Pratt.