CAMDEN — A former Atlantic City firefighter pleaded guilty Friday to health care fraud in connection with a large-scale prescription-drug fraud ring.
It was the fifth guilty plea in the past two days and the first to involve a public employee. Federal authorities have been investigating health-benefits fraud in three Absecon Island municipalities, including Atlantic City, over the past few months.
Michael Pepper, 45, of Northfield, a retired firefighter, pleaded guilty to conspiracy to commit health-benefits fraud before U.S. District Judge Robert B. Kugler.
Pepper was one of three people to enter a guilty plea Friday, admitting to health care fraud. The three men’s plea agreements described a massive prescription-fraud scheme that involved recruiting public employees — teachers, firefighters, municipal police officers and a state trooper — to obtain prescriptions for patients whom doctors never treated.
The prescriptions included compounded pain creams, scar creams, antifungal creams, libido creams and certain vitamin combinations.
In exchange, the doctors would receive kickbacks from an out-of-state compounding pharmacy and pay co-conspirators.
Drug compounding is a process where a pharmacist mixes ingredients into a custom drug. While legal, the resulting drugs are expensive, and, as recent federal prosecutions have shown here and elsewhere, a target for fraud.
As Kugler went through the terms of the plea agreement and charges, Pepper stood at the podium answering each question “yes sir.”
Steven Robert Urban-ski, 37, a pharmacological broker from Marlton, and Thomas J. Hodnett, 41, a pharmaceutical sales representative from Voorhees, also entered guilty pleas Friday. The trio served as recruiters in the conspiracy, according to court documents.
As part of the plea agreement, Pepper will forfeit $113,627 and pay restitution of $719,481.
“Mr. Pepper has acknowledged his mistake and accepted full responsibility for his actions. He has started the process of remediation by pleading guilty, by agreeing to forfeiture, by promising to pay restitution and by taking other positive action,” Joe Levin, Pepper’s attorney, said in a statement. “Everyone makes mistakes, and this mistake should not define Mr. Pepper, who has otherwise been an exemplary person who has served our country, state and community with honor and distinction.”
According to state records, Pepper was a 10-year veteran of the Atlantic City Fire Department before resigning last month with a salary of $101,741.
Atlantic City Fire Chief Scott Evans described Pepper as a “good employee,” but he declined comment about the case.
“While he was employed here, we had no problems,“ Evans said.
Two months ago, federal subpoenas were issued to Atlantic City, Ventnor and Margate seeking information about potential fraud targeting public-employee prescription benefits. A separate investigation led by Atlantic County Prosecutor Damon G. Tyner also is focusing on public-employee prescription fraud, including compounded medications.
Pepper, Hodnett and Urbanski all have sentencing scheduled for Dec. 5 and could face as many as 10 years in prison.
As part of the plea agreement, Urbanski will forfeit more than $113,668 and pay restitution of $752,291.
Hodnett agreed to forfeit more than $269,966 and pay restitution of $1.5 million.
Urbanski is represented by attorney Richard Sparaco, based in Cherry Hill. Hodnett is represented by attorney James J. Leonard Jr., based in Atlantic City.
On Thursday, Matthew Tedesco, a 42-year-old pharmaceutical representative from Linwood, pleaded guilty to health care fraud charges before U.S. District Judge Robert B. Kugler for leading a conspiracy that netted him $11 million in profit in little more than a year.
In a plea deal with prosecutors, Tedesco and Robert Bessey, 43, of Philadelphia, also described recruiting public employees — to obtain prescriptions for patients whom doctors never treated.
In exchange, the doctors would receive kickbacks from an out-of-state compounding pharmacy. Tedesco also recruited patients to request expensive, unneeded drugs without having seen a doctor, according to his plea.
Using preprinted prescription forms, the two men targeted medications with the highest possible reimbursement, and often sought 12 months of refills “without regard for the medical necessity,” according to the criminal information.
Both men are scheduled to be sentenced Dec. 4 and could face as many as 10 years in prison.