throbber
Case 1:20-cv-05821-BMC Document 1 Filed 12/01/20 Page 1 of 52 PageID #: 1
`
`Michael A. Sirignano, Esq.
`Barry I. Levy, Esq.
`Jennifer Abreu, Esq.
`RIVKIN RADLER LLP
`926 RXR Plaza
`Uniondale, New York 11556
`(516) 357-3000
`
`Counsel for Plaintiffs Government Employees
`Insurance Company, GEICO Indemnity Company,
`GEICO General Insurance Company and
`GEICO Casualty Company
`
`UNITED STATES DISTRICT COURT
`EASTERN DISTRICT OF NEW YORK
`- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -X
`GOVERNMENT EMPLOYEES INSURANCE
`COMPANY, GEICO INDEMNITY COMPANY,
`GEICO GENERAL INSURANCE COMPANY and
`GEICO CASUALTY COMPANY,
`
`
`Plaintiffs,
`
`
`
`-against-
`
`
`
`
`
`Docket No.: _____( )
`
`
`
`
`
`
`
`
`
`NYRX PHARMACY INC.,
`YURIY AVULOV,
`AND JOHN DOE NOS. “1” THROUGH “5,”
`
`
`Defendants.
`- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -X
`
`
`COMPLAINT
`
`Plaintiffs Government Employees Insurance Company, GEICO Indemnity Company,
`
`GEICO General Insurance Company and GEICO Casualty Company (collectively, “GEICO” or
`
`“Plaintiffs”), as and for their Complaint against Defendants, NYRX Pharmacy, Inc., Yuriy
`
`Avulov, and John Doe Nos. “1” through “5” (collectively, the “Defendants”), hereby allege as
`
`follows:
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`

`

`Case 1:20-cv-05821-BMC Document 1 Filed 12/01/20 Page 2 of 52 PageID #: 2
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`NATURE OF THE ACTION
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`1.
`
`This action seeks to terminate an on-going fraudulent scheme perpetrated against
`
`GEICO by the Defendants who have exploited the New York “No-Fault” insurance system by
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`submitting more than $4.6 million in fraudulent billing to GEICO for medically unnecessary
`
`pharmaceuticals dispensed to individuals involved in automobile accidents and eligible for
`
`insurance coverage under policies of insurance issued by GEICO (the “Insureds”).
`
`2.
`
`The fraudulent scheme was spearheaded by Yuriy Avulov (“Avulov”) who used,
`
`and continues to use, NYRX Pharmacy, Inc. (“NYRX Pharmacy”) to submit thousands of
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`fraudulent No-Fault insurance charges seeking payment for a set of specifically targeted,
`
`medically unnecessary “pain relieving” topical pain prescription drug products, primarily in the
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`form of Diclofenac Sodium Gel, Lidocaine 5% Ointment and Lidocaine 5% Patches
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`(collectively, the “Fraudulent Topical Pain Products”), as well as various oral medications,
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`primarily in the form of oral pain relievers and muscle relaxants (together with the Fraudulent
`
`Topical Pain Products, the “Fraudulent Pharmaceuticals”).
`
`3.
`
`To effectuate the scheme, NYRX Pharmacy and its owner Avulov (collectively,
`
`the “Pharmacy Defendants”) entered into illegal, collusive agreements with prescribing
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`healthcare providers (collectively, the “Prescribing Providers”) and unlicensed laypersons (the
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`“Clinic Controllers”) who work at or are associated with various multidisciplinary medical
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`clinics that almost exclusively treat No-Fault patients (the “No-Fault Clinics”). Pursuant to these
`
`illegal, collusive agreements, the Pharmacy Defendants steered the Prescribing Providers and
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`Clinic Controllers to prescribe and direct large volumes of prescriptions for the targeted
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`Fraudulent Topical Pain Products to NYRX Pharmacy, in place of other effective, but much less
`
`costly prescription and non-prescription drug products.
`
`
`
`
`
`2
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`

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`4.
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`The Pharmacy Defendants intentionally dispensed the targeted pharmaceutical
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`products without regard to genuine patient care in order to financially enrich themselves through
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`egregiously inflated charges submitted to GEICO. For example, billing from NYRX Pharmacy
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`typically ranged from $1,179.00 to $2,358.00 for a single tube of Diclofenac Gel 3%, with
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`charges at times exceeding $3,500.00 for a single tube; from $380.50 to $1,522.00 for a single
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`tube of Lidocaine 5% Ointment, with charges at times exceeding $1,900.00; and from $308.10 to
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`$925.20 for a prescription of Lidocaine 5% Patch.
`
`5.
`
`The Pharmacy Defendants’ scheme not only inflated the charges submitted to
`
`GEICO and other insurers, but also posed serious risks to the patients’ health as the Fraudulent
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`Pharmaceuticals were prescribed and dispensed in predetermined fashion, without regard to
`
`genuine patient care, and without regard to proper documentation or with documentation that
`
`was inconsistent with the medications actually prescribed and dispensed.
`
`6.
`
`By this action, GEICO seeks to recover more than $434,000.00 that the Pharmacy
`
`Defendants stole from it, along with a declaration that GEICO is not legally obligated to pay
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`reimbursement to NYRX Pharmacy of over $3,441,000.00 in pending fraudulent No-Fault
`
`claims that the Pharmacy Defendants submitted or caused to be submitted through NYRX
`
`Pharmacy because:
`
`(i)
`
`(ii)
`
`NYRX Pharmacy billed for pharmaceutical products that were prescribed
`and dispensed pursuant to predetermined fraudulent protocols designed to
`exploit the patients for financial gain, without regard for genuine patient
`care;
`
`the Pharmacy Defendants participated in illegal, collusive relationships in
`which the Pharmacy Defendants steered the Prescribing Providers and
`Clinic Controllers to direct illegal prescriptions for the Fraudulent
`Pharmaceuticals to NYRX Pharmacy in exchange for unlawful kickbacks
`and other financial incentives;
`
`3
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`
`
`
`
`

`

`Case 1:20-cv-05821-BMC Document 1 Filed 12/01/20 Page 4 of 52 PageID #: 4
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`(iii)
`
`
`
`(iv)
`
`the Pharmacy Defendants intentionally targeted a specific set of
`pharmaceutical products (i.e., the Fraudulent Topical Pain Products) that
`NYRX Pharmacy dispensed in large volumes to Insureds with exorbitant
`charges, in place of other effective, less costly pharmaceuticals in order to
`inflate the charges to GEICO; and
`
`the Pharmacy Defendants made and continue to make false and fraudulent
`misrepresentations to GEICO by submitting or causing to be submitted
`charges for
`the Fraudulent Pharmaceuticals dispensed by NYRX
`Pharmacy pursuant to illegal, invalid and duplicitous prescriptions.
`
`7.
`
`The Defendants fall into the following categories:
`
`(i)
`
`(ii)
`
`(iii)
`
`NYRX Pharmacy is a New York corporation engaged in a fraudulent
`scheme in which it dispensed the Fraudulent Pharmaceuticals in order to
`submit to GEICO and other New York automobile insurers claims for
`reimbursement of No-Fault Benefits to which it is not entitled;
`
`Avulov is the record owner of NYRX Pharmacy; and
`
`John Doe Nos. “1” through “5” are persons and entities, presently not
`identifiable, who along, with the Pharmacy Defendants, participated in the
`operation and control of NYRX Pharmacy, including facilitating the
`illegal, collusive agreements with the Prescribing Providers and Clinic
`Controllers.
`
`8.
`
`The Pharmacy Defendants’ scheme began in 2018. As discussed more fully
`
`
`
`
`
`
`
`
`
`below, the Pharmacy Defendants at all times have known that: (i) the billed-for pharmaceutical
`
`products were prescribed and dispensed pursuant to predetermined fraudulent protocols designed
`
`to exploit the patients for financial gain, without regard for genuine patient care; (ii) the
`
`Pharmacy Defendants participated in illegal, collusive agreements in which they steered the
`
`Prescribing Providers and Clinic Controllers to direct illegal prescriptions for the Fraudulent
`
`Pharmaceuticals to NYRX Pharmacy in exchange for unlawful kickbacks and other financial
`
`incentives; (iii) the Pharmacy Defendants intentionally targeted a specific set of pharmaceutical
`
`products (i.e., the Fraudulent Topical Pain Products) that NYRX Pharmacy dispensed in large
`
`volumes to Insureds with exorbitant charges, in place of other effective, less costly
`
`
`
`4
`
`

`

`Case 1:20-cv-05821-BMC Document 1 Filed 12/01/20 Page 5 of 52 PageID #: 5
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`pharmaceuticals; and (iv) the Pharmacy Defendants made and continue to make false and
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`fraudulent misrepresentations to GEICO by submitting or causing to be submitted charges for the
`
`Fraudulent Pharmaceuticals dispensed by NYRX Pharmacy pursuant to illegal, invalid, and
`
`duplicitous prescriptions.
`
`9.
`
`Based on the foregoing, NYRX Pharmacy does not now have – and has never had
`
`– any right to be compensated for the Fraudulent Pharmaceuticals allegedly dispensed to GEICO
`
`Insureds. The chart attached hereto as Exhibit “1” sets forth the fraudulent claims that have been
`
`identified to date which the Pharmacy Defendants submitted, or caused to be submitted, to
`
`GEICO using the United States mails. As a result of the Pharmacy Defendants’ scheme, GEICO
`
`has incurred damages of approximately $434,000.00.
`
`
`
`I.
`
`Plaintiffs
`
`THE PARTIES
`
`10.
`
`Plaintiffs Government Employees Insurance Company, GEICO Indemnity
`
`Company, GEICO General Insurance Company and GEICO Casualty Company are Maryland
`
`corporations with their principal places of business in Chevy Chase, Maryland. GEICO is
`
`authorized to conduct business and to issue automobile insurance policies in New York.
`
`II. Defendants
`
`11.
`
`Defendant NYRX Pharmacy is a New York corporation, incorporated on or about
`
`June 19, 2018, with its principal place of business at 179-07 Union Turnpike, Fresh Meadows,
`
`New York.
`
`
`
`12.
`
`NYRX Pharmacy was registered as a pharmacy with the New York State
`
`Department of Education on August 17, 2018, but is no longer registered as an active pharmacy.
`
`
`
`5
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`

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`Case 1:20-cv-05821-BMC Document 1 Filed 12/01/20 Page 6 of 52 PageID #: 6
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`13.
`
`NYRX Pharmacy and its owner Avulov, knowingly submitted, and continue to
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`submit through the present day, fraudulent claims to GEICO for pharmaceuticals purportedly
`
`dispensed to GEICO Insureds and continue to seek reimbursement on unpaid fraudulent claims.
`
`14.
`
`Defendant Avulov resides in and is a citizen of New York and is the record owner
`
`of NYRX Pharmacy.
`
`15.
`
`John Doe Nos. 1-5 reside in and are citizens of New York. John Doe Nos. 1-5 are
`
`individuals and entities, presently not identifiable, who, along with the Pharmacy Defendants,
`
`participate in the operation and control of NYRX Pharmacy, including facilitating illegal,
`
`collusive agreements with the Prescribing Providers and Clinic Controllers, whereby they
`
`prescribe, or purport to prescribe, the Fraudulent Pharmaceuticals in exchange for kickbacks and
`
`other financial incentives from the Pharmacy Defendants.
`
`JURISDICTION AND VENUE
`
`This Court has jurisdiction over the subject matter of this action under 28 U.S.C.
`
`16.
`
`§ 1332(a)(1) because the controversy exceeds the sum or value of $75,000.00, exclusive of
`
`interests and costs, and is between citizens of different states. Pursuant to 28 U.S.C. § 1331, this
`
`Court also has jurisdiction over the claims brought under 18 U.S.C. §§ 1961 et seq., the
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`Racketeer Influenced and Corrupt Organizations (“RICO”) Act, because they arise under the
`
`laws of the United States. In addition, this Court has supplemental jurisdiction over the subject
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`matter of the claims asserted in this action pursuant to 28 U.S.C. § 1367.
`
`17.
`
`Venue in this District is appropriate pursuant to 28 U.S.C. § 1391, as the Eastern
`
`District of New York is the District where one or more of the Defendants reside and because this
`
`is the District where a substantial amount of the activities framing the basis of the Complaint
`
`occurred.
`
`
`
`6
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`

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`
`
`
`
`ALLEGATIONS COMMON TO ALL CLAIMS
`
`I. An Overview of New York’s No-Fault Laws
`
`18.
`
`19.
`
` GEICO underwrites automobile insurance in the State of New York.
`
`New York’s “No-Fault” laws are designed to ensure that injured victims of motor
`
`vehicle accidents have an efficient mechanism to pay for and receive the healthcare services that
`
`they need. Under New York’s Comprehensive Motor Vehicle Insurance Reparations Act (N.Y.
`
`Ins. Law §§ 5101 et seq.) and the regulations promulgated pursuant thereto (11 N.Y.C.R.R. §§
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`65 et seq.)(collectively, referred to herein as the “No-Fault Laws”), automobile insurers are
`
`required to provide Personal Injury Protection Benefits (“No-Fault Benefits”) to Insureds.
`
`20.
`
`No-Fault Benefits include up to $50,000.00 per Insured for necessary expenses
`
`that are incurred for health care goods and services.
`
`21.
`
`The No-Fault Laws limit reimbursement for benefits to prescription drugs only.
`
`Over-the-counter drugs and products which may be purchased without prescription are not
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`covered expenses under the No-Fault Laws.
`
`22.
`
`An Insured can assign his or her right to No-Fault Benefits to the providers of
`
`healthcare services in exchange for those services. Pursuant to a duly executed assignment, a
`
`healthcare provider may submit claims directly to an insurance company and receive payment
`
`for necessary goods and medical services provided, using the claim form required by the New
`
`York State Department of Insurance (known as the “Verification of Treatment by Attending
`
`Physician or Other Provider of Health Service,” or, more commonly, as an “NF-3”). In the
`
`alternative, healthcare providers sometimes submit claims using the Health Care Financing
`
`Administration insurance claim form (known as the “HCFA-1500 Form”).
`
`
`
`7
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`

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`23.
`
`Pursuant to New York’s No-Fault Laws (11 N.Y.C.R.R. § 65-3.16(a)(12)), a
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`healthcare provider is not eligible to receive No-Fault Benefits if it fails to meet any applicable
`
`New York state or local licensing requirement necessary to perform such services in New York.
`
`24.
`
`The implementing regulation adopted by the Superintendent of Insurance, 11
`
`NYCRR § 65-3.16(a)(12), provides, in pertinent part, as follows:
`
`A provider of health care services is not eligible for reimbursement under section
`5102(a)(1) of the Insurance Law if the provider fails to meet any applicable New
`York State or local dispensing requirement necessary to perform such service in
`New York … (emphasis supplied).
`
`In State Farm Mut. Auto. Ins. Co. v. Mallela, 4 N.Y.3d 313 (2005), the New York
`
`25.
`
`Court of Appeals, confirmed that healthcare service providers that fail to comply with licensing
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`requirements are ineligible to collect No-Fault Benefits, and that insurers may look beyond a
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`facially-valid license to determine whether there was a failure to abide by state and local law.
`
`26.
`
`Pursuant to New York Insurance Law § 403, the NF-3s and HCFA-1500 Forms
`
`submitted by a healthcare provider to GEICO, and to all other automobile insurers, must be
`
`verified by the healthcare provider subject to the following warning:
`
`Any person who knowingly and with intent to defraud any insurance
`company or other person files an application for insurance or statement of
`claim containing any materially false information, or conceals for the
`purpose of misleading, information concerning any fact material thereto,
`commits a fraudulent insurance act, which is a crime.
`
`II. An Overview of Applicable Licensing Requirements
`
`27.
`
`Pursuant to New York Education Law § 6808, no person, firm, corporation or
`
`
`
`
`
`association shall possess drugs, prescriptions or poisons for the purpose of compounding,
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`dispensing, retailing, wholesaling or manufacturing, or shall offer drugs, prescriptions or poisons
`
`for sale at retail or wholesale unless registered by the New York State Department of Education
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`as a pharmacy, wholesaler, manufacturer or outsourcing facility.
`
`
`
`8
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`

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`28.
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`Pursuant to 8 N.Y.C.R.R. § 29.1, pharmacies in New York are prohibited from
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`“exercising undue influence on the patient or client, including the promotion of the sale of
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`services, goods, appliances or drugs in such manner as to exploit the patient or client for the
`
`financial gain of the practitioner or of a third party.”
`
`29.
`
`Pursuant to 8 N.Y.C.R.R. § 63.1(7), pharmacists shall conduct a prospective drug
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`review before each prescription is dispensed, which review shall include screening for potential
`
`drug therapy problems due to therapeutic duplication, drug-drug interactions, including serious
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`interactions with over-the-counter drugs, incorrect drug dosage or duration of drug treatment,
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`drug-allergy interactions, and clinical abuse or misuse.
`
`30.
`
`Pursuant to 8 N.Y.C.R.R. § 29.1, pharmacies are prohibited from “directly or
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`indirectly offering, giving, soliciting, or receiving or agreeing to receive, any fee or other
`
`consideration to or from a third party for the referral of a patient or client or in connection with
`
`the performance of professional services.”
`
`31.
`
`New York Education Law § 6810 prohibits pharmacies from dispensing
`
`pharmaceuticals when a prescription form for a drug includes any other drug. Separate
`
`prescriptions are required for each drug prescribed and dispensed.
`
`32.
`
` New York Education Law § 6810 prohibits persons and corporations, not
`
`licensed to issue a prescription, to willfully cause prescription forms, blanks, or facsimiles
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`thereof to be disseminated to any person other than a person who is licensed to issue a
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`prescription.
`
`33.
`
`Pursuant to Education Law § 6512, §6530(11), (18), and (19), aiding and abetting
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`an unlicensed person to practice a profession, offering any fee or consideration to a third party
`
`
`
`9
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`

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`for the referral of a patient, and permitting any person not authorized to practice medicine to
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`share in the fees for professional services is considered a crime and/or professional misconduct.
`
`34.
`
`New York Education Law § 6530(17) prohibits a physician from “exercising
`
`undue influence” on the patient by promoting the sale of drugs so as to exploit the patient for the
`
`financial gain of the licensee or of a third party.
`
`35.
`
`New York Education Law § 6530(18) prohibits a physician from “directly or
`
`indirectly” offering, giving, soliciting, receiving or agreeing to receive any fee or other
`
`consideration to or from a third party in connection with the performance of professional
`
`services.
`
`36.
`
`New York Education Law § 6509-a prohibits a professional licensee from
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`“directly or indirectly” requesting, receiving, or participating in the division, transference,
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`assignment, rebate, splitting or refunding of a fee in connection with professional care or services
`
`related to drugs and/or medications.
`
`37.
`
`Pursuant to New York Education Law § 6808, pharmacy owners and supervising
`
`pharmacists shall be responsible for the proper conduct of a pharmacy.
`
`III. The Pharmacy Defendants’ Scheme Involving the Fraudulent Pharmaceuticals
`
`
`A. Overview of the Scheme
`
`Beginning in 2018, and continuing uninterrupted through the present day, the
`
`38.
`
`Pharmacy Defendants masterminded and implemented a fraudulent scheme in which they used
`
`NYRX Pharmacy to exploit patients for financial gain by billing the New York automobile
`
`insurance industry millions of dollars in exorbitant charges seeking reimbursement relating to the
`
`Fraudulent Pharmaceuticals purportedly dispensed to the Insureds.
`
`
`
`10
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`

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`39.
`
`NYRX Pharmacy purported to be a storefront neighborhood pharmacy operating
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`in Fresh Meadows, Queens, when in fact, it operated as a large-scale fraudulent scheme that
`
`exploited GEICO’s Insureds, as well as insureds of other New York automobile insurers, through
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`the prescribing and dispensing of the Fraudulent Pharmaceuticals, while intentionally
`
`disregarding a vast array of other pharmaceutical products, including over-the-counter (“OTC”)
`
`medications readily available at a fraction of the cost.
`
`40.
`
`Unlike legitimate pharmacies dispensing a variety of pharmaceutical products,
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`NYRX Pharmacy intentionally focused on and targeted a specific set of pharmaceutical products
`
`(i.e., the Fraudulent Topical Pain Products), which make up about 92% of the billing that the
`
`Pharmacy Defendants submitted to GEICO for reimbursement.
`
`41. While about 92% of the billing that the Pharmacy Defendants submitted through
`
`NYRX Pharmacy was for the Fraudulent Topical Pain Products, the remaining billing submitted
`
`was primarily for oral pain-relieving medication, including nonsteroidal anti-inflammatory drugs
`
`(“NSAIDs”) and muscle relaxers submitted as part of the scheme to defraud GEICO.
`
`42.
`
`The Pharmacy Defendants chose to target the Fraudulent Topical Pain Products
`
`because they knew that (i) similar over-the-counter drugs that could be recommended to Insureds
`
`are not covered expenses under the No-Fault Laws and (ii) they could acquire the Fraudulent
`
`Topical Pain Products at low cost and submit claims for reimbursement under the No-Fault Laws
`
`at exorbitant prices.
`
`43.
`
`In furtherance of the fraudulent scheme, the Pharmacy Defendants steered the
`
`Prescribing Providers and the Clinic Controllers to prescribe and direct large volumes of
`
`prescriptions to NYRX Pharmacy for the targeted set of Fraudulent Topical Pain Products, which
`
`were purportedly prescribed and dispensed to treat patients at the No-Fault Clinics.
`
`
`
`11
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`

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`44. Many of the No-Fault Clinics where the prescriptions steered to NYRX Pharmacy
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`were generated included clinics that housed a “revolving door” of numerous other purported
`
`healthcare providers geared towards exploiting New York’s No-Fault insurance system.
`
`45.
`
`NYRX Pharmacy received large volumes of medically unnecessary prescriptions
`
`from the Prescribing Providers and the Clinic Controllers at the No-Fault Clinics almost
`
`immediately after NYRX Pharmacy became registered to operate, despite the fact that NYRX
`
`Pharmacy was a new pharmacy, its owner was not a pharmacist, and it had no reputation or track
`
`record in the pharmacy industry.
`
`46.
`
`The Pharmacy Defendants obtained large volumes of medically unnecessary
`
`prescriptions from the Prescribing Providers and the Clinic Controllers at the No-Fault Clinics
`
`pursuant to predetermined protocols, in exchange for the payment of kickbacks or other financial
`
`incentives, solely to maximize profits and without regard to genuine patient care.
`
`47.
`
`In some instances, the Prescribing Providers were supplied what is essentially a
`
`product list – disguised as a “prescription order form” (the “Fraudulent Prescription Forms”) – of
`
`the various Fraudulent Pharmaceuticals that NYRX Pharmacy dispensed.
`
`48.
`
`The Fraudulent Prescription Forms are invalid and illegal in that they are not
`
`electronic prescriptions nor are they official serialized New York State prescriptions bearing the
`
`legible, conspicuous imprinted or stamped name of the authorized prescribing healthcare
`
`provider.
`
`49.
`
`Some of the Fraudulent Prescription Forms created by the Pharmacy Defendants
`
`listed NYRX Pharmacy’s name, address, and contact information, along with the names of the
`
`Fraudulent Pharmaceuticals, including the Fraudulent Topical Pain Products and the quantity in
`
`which they were to be prescribed and dispensed to Insureds.
`
`
`
`12
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`

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`50.
`
`In other instances, the Fraudulent Prescription Forms submitted by the Pharmacy
`
`Defendants to GEICO listed another pharmacy’s name, address, and contact information, not
`
`NYRX Pharmacy.
`
`51.
`
`The other pharmacy whose name appeared on the Fraudulent Prescription Forms
`
`in some instances was Wellmart Rx, Inc. (“Wellmart Rx”).
`
`52. Wellmart Rx was a named defendant in a federal affirmative action commenced
`
`by GEICO captioned, GEICO v. Wellmart Rx, Inc., et al, 1:19-CV-04414 (KAM)(RLM)
`
`(E.D.N.Y. 2019) (the “Wellmart Rx matter”). In the Wellmart Rx matter, similar to the
`
`fraudulent scheme described herein, GEICO alleged that Wellmart Rx, among other defendants,
`
`stole from GEICO by submitting, or causing to be submitted thousands of fraudulent No-Fault
`
`insurance claims seeking reimbursement for pharmaceutical products.
`
`53. While NYRX Pharmacy purports to operate as a separate and distinct pharmacy
`
`from Wellmart Rx, in some instances, NYRX Pharmacy submitted billing to GEICO that listed
`
`Wellmart Rx’s address, instead of its own address. Further, on at least one occasion, an
`
`insurance check made payable to NYRX Pharmacy was deposited into Wellmart Rx’s bank
`
`account. Moreover, both NYRX Pharmacy and Wellmart Rx made payments to Statewide
`
`Employment Professionals, Inc. (“Statewide Employment’), a New York corporation that
`
`appears to have no legitimate purpose but which received payments from entities that were
`
`indicted by the Brooklyn District Attorney’s Office for allegedly participating in a healthcare
`
`fraud scheme wherein patients were paid in cash in exchange for going to clinics for medically
`
`unnecessary treatment.
`
`54.
`
`Although Wellmart Rx purportedly ceased its operation in May of 2019, NYRX
`
`Pharmacy filled and dispensed pharmaceutical drug products pursuant to Wellmart Rx’s
`
`
`
`13
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`

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`Case 1:20-cv-05821-BMC Document 1 Filed 12/01/20 Page 14 of 52 PageID #: 14
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`Fraudulent Prescription Forms. Furthermore, Wellmart Rx’s former pharmacist, Cyril Gulian
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`became NYRX Pharmacy’s supervising pharmacist.
`
`55.
`
`The Fraudulent Prescription Forms,
`
`including Wellmart Rx’s Fraudulent
`
`Prescription Forms that were filled by NYRX Pharmacy, steered the Prescribing Providers to
`
`prescribe predetermined Fraudulent Topical Pain Products such as Diclofenac Gel 3%, Lidocaine
`
`5% Ointment, and/or Lidocaine 5% Patch (or its equivalent, Lidoderm 5% Patch), which NYRX
`
`Pharmacy thereafter billed at exorbitant charges.
`
`56.
`
`Additionally, the Fraudulent Prescription Forms also steered the Prescribing
`
`Providers to prescribe other Fraudulent Pharmaceuticals, including predetermined oral
`
`medications, such as Naproxen and Celebrex to further increase NYRX Pharmacy’s profits. The
`
`Prescribing Providers chose which predetermined pharmaceutical product should be given to the
`
`Insured by marking off or circling one of the designed boxes on the prescription form.
`
`57.
`
`A sample of the prescriptions issued by the Prescribing Providers using the
`
`Fraudulent Prescription Forms, which the Pharmacy Defendants submitted to GEICO in support
`
`of NYRX Pharmacy’s fraudulent billing, is annexed hereto as Exhibit “2”.
`
`58.
`
`The Prescribing Providers also were provided in some instances with preset labels
`
`or rubber stamps that contained the names of some of the Fraudulent Pharmaceuticals. The
`
`Prescribing Providers then used the preset labels or stamps on their official New York State
`
`prescription pads to prescribe the Fraudulent Pharmaceuticals to the Insureds that were dispensed
`
`by NYRX Pharmacy
`
`59.
`
`The preset label or rubber stamps steered the Prescribing Providers to prescribe
`
`predetermined Fraudulent Topical Pain Products, particularly Diclofenac Gel 3% and Lidocaine
`
`5% Ointment, which was then dispensed by NYRX Pharmacy.
`
`
`
`14
`
`

`

`Case 1:20-cv-05821-BMC Document 1 Filed 12/01/20 Page 15 of 52 PageID #: 15
`
`60.
`
`A sample of prescriptions issued by the Prescribing Providers using preset labels
`
`or rubber stamps, which NYRX Pharmacy submitted to GEICO in support of its fraudulent
`
`billing, is annexed hereto as Exhibit “3”.
`
`61.
`
`In keeping with the fact that the Pharmacy Defendants illegally steered the
`
`Prescribing Providers and the Clinic Controllers to provide NYRX Pharmacy with prescriptions
`
`for the Fraudulent Pharmaceuticals pursuant to predetermined fraudulent protocols and solely to
`
`maximize profits, the Insureds were not given the prescriptions to fill (even though many of the
`
`prescriptions were paper prescriptions) and they were not given the option to use a pharmacy of
`
`their choosing.
`
`62.
`
`The Pharmacy Defendants ensured that the Prescribing Providers and Clinic
`
`Controllers directed the prescriptions for the Fraudulent Pharmaceuticals to NYRX Pharmacy,
`
`regardless of (i) the distance of the pharmacy to the Insureds’ residences or the No-Fault Clinics
`
`where the Insureds were receiving treatment and (ii) the fact that there were countless other
`
`pharmacies located much closer to the Insured’s residences and the No-Fault Clinics.
`
`63.
`
`Notably, approximately 55% of
`
`the
`
`Insureds
`
`that allegedly
`
`received
`
`pharmaceuticals dispensed by NYRX Pharmacy lived outside of Queens, New York, where the
`
`pharmacy is located, with a majority of the Insureds’ residences scattered throughout Brooklyn,
`
`Bronx, Manhattan, Staten Island and Long Island, including Nassau and Suffolk County.
`
`64.
`
`In some instances, the Insureds’ residences are located in cities and counties
`
`outside of New York City, including Albany, Westchester County, Rockland County, Sullivan
`
`County, Orange County, Clinton County, Dutchess County, Onondaga County, Rensselaer
`
`County, Saratoga Springs, and Oneida County, with some residences located more than 150
`
`miles away from NYRX Pharmacy.
`
`
`
`15
`
`

`

`Case 1:20-cv-05821-BMC Document 1 Filed 12/01/20 Page 16 of 52 PageID #: 16
`
`65.
`
`But for the Pharmacy Defendants’ illegal, collusive agreements with the
`
`Prescribing Providers and Clinic Controllers, these Insureds would not have received
`
`pharmaceutical products from a pharmacy that is located in a county or city outside of their place
`
`of residence.
`
`66.
`
`Instead, the Prescribing Providers and the Clinic Controllers directed prescriptions
`
`for the Fraudulent Pharmaceuticals to NYRX Pharmacy, irrespective of its inconvenient location
`
`to the Insureds’ residences because the prescriptions were being issued pursuant to illegal,
`
`collusive agreements between the Pharmacy Defendants and the Prescribing Providers and Clinic
`
`Controllers.
`
`67.
`
`The Pharmacy Defendants used the prescriptions obtained from the No-Fault
`
`Clinics to bill GEICO and other insurers millions of dollars for the Fraudulent Pharmaceuticals.
`
`68.
`
`The Pharmacy Defendants billed GEICO more than $4.6 million, with more than
`
`$4 million of that billing being submitted in only one year of active operations by NYRX
`
`Pharmacy.
`
`69.
`
`Upon information and belief, considering that GEICO is only one of many
`
`automobile insurers in New York, NYRX Pharmacy likely billed the New York automobile
`
`industry in excess of $10 million for the Fraudulent Pharmaceuticals, with substantially all of
`
`that billing taking place in a single year.
`
`70.
`
` NYRX Pharmacy, after a flurry of billing to GEICO and other New York
`
`automobile insurers, shut down active operations and terminated NYRX Pharmacy’s registration
`
`with New York State Department of Education.
`
`71.
`
`Nevertheless, as a further part of the scheme, the Pharmacy Defendants continue
`
`their scheme by hiring law firms to pursue collection on the fraudulent charges submitted to
`
`
`
`16
`
`

`

`Case 1:20-cv-05821-BMC Document 1 Filed 12/01/20 Page 17 of 52 PageID #: 17
`
`GEICO by NYRX Pharmacy, through numerous, separate no-fault arbitration or civil court
`
`collection proceedings seeking recovery on the individual bills, which proceedings may continue
`
`for years.
`
`72.
`
`The Pharmacy Defendants’ continued collection efforts through numerous,
`
`separate no-fault arbitration or civil court collection proceedings is an essential part of their
`
`fraudulent scheme since they know it is impractical for an arbitrator or civil court judge in a
`
`single no-fault arbitration or civil court proceeding, typically involving a single bill, to uncover
`
`or address the Pharmacy Defendants’ large scale, complex fraud scheme involving the
`
`prescription and dispensing of fraudulent pharmaceuticals to hundreds of patients across
`
`numerous different No-Fault Clinics located throughout the New York metropolitan area.
`
`73.
`
`The Pharmacy Defendants masterminded and implemented their pharmaceutical
`
`fraud scheme and recruited the Prescribing Providers and Clinic Controllers as willing
`
`participants, knowing that: (i) the Fraudulent Pharmaceuticals were prescribed and dispensed
`
`pursuant to predetermined protocols designed to exploit the patients for financial gain, without
`
`regard to genuine patient care; (ii) the Fraudulent Pharmaceuticals were the product of illegal,
`
`collusive agreements intended to inflate the billing from NYRX

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