Federal Court in Camden

Mitchell H. Cohen Building and U.S. Courthouse in Camden. Photo by Erin Grugan. 

CAMDEN — A Northfield man became the ninth person to plead guilty in the ongoing federal investigation targeting abuse of the State Health Benefit Plan.

Richard Zappala, 45, a pharmaceutical sales representative, appeared in federal court Thursday before Judge Robert B. Kugler to plead guilty to conspiracy to defraud the state health benefits plan.

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Zappala admitted to fraud totaling $4.3 million, which he must pay back. He also must forfeit more than $1.4 million for his role in a prescription benefits fraud scheme involving people receiving kickbacks for filling prescriptions for compounded cream medications.

According to court documents, Zappala acted as a recruiter in the scheme, getting individuals to obtain expensive and medically unnecessary compounded medications from an out-of-state pharmacy from January 2015 through April 2016.

The medications included pain, scar, antifungal and libido creams, as well as vitamin combinations.

He faces as many as 10 years in federal prison for his role in the scheme, which involved teachers, police, firefighters, doctors and pharmaceutical representatives, as well as an out-of-state compounding pharmacy.

He will be sentenced at 11:30 a.m. Jan 5.

On his Facebook profile, Zappala described working for Cobalt Healthcare Consultants, Inc., based in Alabama, which, according to its Bloomberg business profile, “provides sales and consulting services for blood-based cancer diagnostic testing companies.”

He is represented by attorney Kevin Raphael, of Philadelphia. Raphael declined to comment after the hearing.

Drug compounding, a process in which a pharmacist mixes ingredients into a custom drug, is legal, but the resulting drugs are expensive. Recent federal prosecutions have shown here and elsewhere they are a target for fraud.

On Monday, two Burlington County pharmaceutical representatives admitted Monday they submitted fraudulent claims for unnecessary prescriptions, defrauding more than $1.4 million from state health-insurance plans.

On Friday, Margate-based Dr. John Gaffney, 55, pleaded guilty to conspiracy to commit health-benefits fraud before Kugler. Gaffney including teachers, police and firefighters, resulting in fraud of more than $24 million.

Federal authorities have been investigating health-benefits fraud in three Absecon Island municipalities — Atlantic City, Ventnor and Margate — over at least the past few months.

CORRECTION: A previous version of this story incorrectly stated that Gaffney signed more than 200 fraudulent prescriptions. He signed fraudulent prescriptions for more than 200 patients.

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Contact: 609-272-7046 nhuba@pressofac.com

Twitter @acpresshuba

Started working in newsrooms when I was 17 years old. Spent 15 years working for Gannett New Jersey before coming to The Press of Atlantic City in April 2015.

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