CAMDEN — A Pleasantville High School guidance counselor pleaded guilty Thursday to his role in a multimillion-dollar prescription health benefits fraud scheme.
Michael Pilate, 39, of Williamstown, became the 13th person and the first school employee to plead guilty to conspiracy to commit fraud of the state health benefits system before U.S. District Judge Robert Kugler in a scheme prosecutors say involved teachers, firefighters, police officers and State Police troopers.
According to federal court documents, the drug ring targeted the state’s health benefits plan by submitting fraudulent prescriptions for unneeded compounded drugs, which can cost thousands of dollars per prescription.
The health benefits plan would pay generous reimbursements to an unnamed, out-of-state compounding pharmacy. Through an agreement with a co-conspirator, the pharmacy would pay out portions of the reimbursement to doctors, recruiters and participants in the ring, which also included several pharmaceutical representatives.
Pilate was described in court as a mid-level conspirator who received $500 from a co-conspirator per prescription he filled, according to court testimony. He also recruited other people and paid them each $500 per prescription, according to court testimony. As part of Pilate’s plea agreement, he must forfeit $392,684 and pay restitution of $3.49 million — the amount of fraud resulting from his participation in the scheme. His sentencing is scheduled for May 11, and he faces up to 10 years in prison.
Pilate is represented by attorney Teri Lodge, of Marlton, who declined to comment after the hearing Thursday. The plea agreement was signed Oct. 31, 2017.
During the plea hearing, Kugler asked Pilate about his current mental health.
“Quite honestly, this situation is extremely depressing,” he told the judge.
State records show Pilate began working as a school guidance counselor in 2004 and became Pleasantville’s director of guidance within the past two years. Pilate’s salary in Pleasantville as of September 2017 was $102,000, according to state records.
School Superintendent Clarence Alston declined to comment on the situation. Alston’s secretary indicated the district was unaware of his plea agreement ahead of the hearing Thursday.
Pleasantville Education Association President Tim Newkirk said he was shocked to hear about the plea Thursday.
“I don’t know that much about it. Obviously, it’s disappointing to hear something like that,” Newkirk said.
He said union members, who are without a contract and in negotiations, are upset about the news.
“We’re getting it from both ends. Our insurance keeps going up every year, and now people are stealing from the insurance companies and costing us even more money,” Newkirk said.
In August, Matthew Tedesco, 42, of Linwood was first to plead guilty in the scheme for leading the conspiracy, which netted him $11 million.
Most recently, Timothy Frazier, 42, of Galloway Township, pleaded guilty Dec. 1 to defrauding the state health benefits programs and other insurers of $800,000.
The massive prescription-fraud scheme took place from January 2015 to April 2016 and involved recruiting public employees to obtain medically unnecessary prescriptions for patients who were never treated, according to court documents.
The prescriptions were for compounded pain creams, scar creams, anti-fungal creams, libido creams and certain vitamin combinations, according to court documents.
Sentencing for participants is scheduled to begin in March.
Pharmaceutical representatives Robert Bessey of Philadelphia, Steven Urbanski of Marlton and Tedesco are scheduled to be sentenced March 26.
Former Atlantic City firefighter Michael Pepper of Northfield; Margate Dr. James Gaffney of Linwood; and pharmaceutical representatives Thomas Hodnett, of Voorhees, and Judd Holt, of Marlton, are to be sentenced March 27.
Pharmaceutical representatives George Gavras, of Moorestown; Richard Zappala, of Northfield; Michael Neopolitan, of Willow Grove, Pennsylvania; and Andrew Grestel, of Galloway, are to be sentenced March 28.
Frazier will be sentenced March 29.
In all cases, 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.