CAMDEN — A pharmaceutical representative from Galloway Township on Monday admitted his role in a yearlong scheme that defrauded two state health benefits plans out of tens of millions of dollars for compounded prescriptions.
Andrew Gerstel, 39, is the 11th person to plead guilty to conspiracy to commit health care fraud before U.S. District Judge Robert Kugler in the case, which involves pharmaceutical representatives from across South Jersey as well as teachers, firefighters, police officers and state troopers.
Gerstel, who according to his LinkedIn profile is an employee at WraSer Pharmaceuticals of Mississippi, said he defrauded both the State Health Benefits Plan and School Employees Health Benefits Plan, as well as other insurers, out of nearly $500,000. He is represented by attorney Ralph Paolone of Galloway.
As part of his plea agreement, Gerstel must forfeit $184,389 in criminal proceeds he received for his role in the scheme and pay restitution of at least $483,946. He faces up to 10 years in federal prison and a $250,000 fine. Sentencing is scheduled for Feb. 26, 2018, in Camden.
The investigation into abuse of local government health benefits plans surfaced over the summer.
Plea agreements began in August and have included several Atlantic County pharmaceutical representatives, a Margate doctor and a former Atlantic City firefighter.
According to the U.S. Attorney’s Office, from January 2015 through April 2016, Gerstel recruited individuals in New Jersey to obtain expensive and medically unnecessary compounded drugs from a so-far unnamed out-of-state pharmacy.
Compounding is the legal process in which a pharmacist combines ingredients of one or more drugs into a personalized prescription tailored for an individual patient. After filling a prescription, the compounding pharmacy would receive a large payout from the state health benefits plan administrator, which would then be used to pay off the recruiters, doctors and those whose names were used to obtain the prescription, according to court documents.
The compound medication prescriptions — in these cases pain, scar, antifungal and libido creams, as well as vitamin combinations — were reimbursed for thousands of dollars for a one-month supply, the U.S. Attorney’s Office said.
Gerstel was a mid-level conspirator, according to the U.S. Attorney’s Office. He and others received a payout from another top-level conspirator, who was first paid a percentage of each prescription filled and paid out by the yet-to-be-named “pharmacy benefits administrator.”
Gerstel then paid recruiters under him and individuals with insurance coverage to reward them for obtaining the prescriptions.
The court documents state that over the time frame of the conspiracy, the pharmacy benefits administrator paid the compounding pharmacy more than $50 million for compounded medications mailed to individuals in New Jersey.
Ten other conspirators — Matthew Tedesco, Robert Bessey, Michael Pepper, Thomas Hodnett, Steven Urbanski, John Gaffney, Judd Holt, George Gavras, Richard Zappala and Michael Neopolitan — have pleaded guilty to their roles in the scheme and await sentencing.
The government is represented by Assistant U.S. Attorneys R. David Walk Jr. and Jacqueline M. Carle of the U.S. Attorney’s Office in Camden.