Federal Court in Camden

Mitchell H. Cohen Building and U.S. Courthouse in Camden

Timothy Frazier, of Galloway Township, pleaded guilty Friday in federal court in Camden to defrauding New Jersey state health benefits programs and other insurers of $800,000, according to acting U.S. Attorney William E. Fitzpatrick and N.J. Attorney General Christopher S. Porrino.

Frazier, 42, submitted fraudulent claims for medically unnecessary prescriptions, Fitzpatrick said.

Frazier, a commercial construction estimator, pleaded guilty before U.S. District Judge Robert B. Kugler to an information charging him with conspiracy to commit health care fraud, Fitzpatrick said.

Eleven other conspirators have pleaded guilty from August through last month and await sentencing.

According to documents filed in the case and statements made in court:

From January 2015 through April 2016, Frazier served as a recruiter in the conspiracy and persuaded individuals in the state to obtain expensive and medically unnecessary compounded medications from an out-of-state pharmacy, identified in the information only as the “Compounding Pharmacy.”

The conspirators learned certain compound medication prescriptions — including pain, scar, anti-fungal and libido creams, as well as vitamin combinations — were reimbursed for thousands of dollars for a one-month supply.

The conspirators also learned some New Jersey state and local government and education employees, including firefighters, municipal police officers, state troopers and teachers, had insurance coverage for the compound medications.

An entity referred to in the information as the “Pharmacy Benefits Administrator” provided pharmacy benefit management services to the State Health Benefits Program, which covers qualified state and local government employees, retirees and eligible dependents, and the School Employees’ Health Benefits Program, which covers qualified local education employees, retirees and eligible dependents.

The pharmacy benefits administrator would pay prescription drug claims and then bill the state for the amount paid.

Frazier secured insurance information from the individuals and passed it along to a conspirator, who had a doctor sign prescriptions without examining the individuals. The prescriptions were faxed to the compounding pharmacy, which filled the prescriptions and billed the pharmacy benefits administrator.

The pharmacy then paid one of Frazier’s conspirators a percentage of each prescription filled and paid by the pharmacy benefits administrator, which was then distributed to Frazier and other members of the conspiracy.

Frazier paid recruiters under him and individuals with insurance coverage to reward them for obtaining prescriptions, Fitzpatrick said.

According to the information, the pharmacy benefits administrator paid the compounding pharmacy more than $50 million for compounded medications mailed to individuals in the state. Frazier received $145,425 for his role in the scheme, Fitzpatrick said.

As part of the plea agreement, Frazier must forfeit $145,425 in criminal proceeds and pay restitution of at least $801,119, Fitzpatrick said.

Frazier faces a maximum 10 years in prison and a $250,000 fine, or twice the gross gain or loss from the offense. Sentencing is scheduled for March 29, Fitzpatrick said.

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