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California Sees Nation’s First Charges for Telehealth Prescription Scams

Two executives at Done, a California-based telehealth company, were indicted for allegedly scheming to provide easy access to Adderall and other stimulants to patients who didn’t need them.

As many as 50,000 U.S. patients' access to treatment for attention deficit hyperactivity disorder could be disrupted after two executives at Done, a California-based telehealth company, were indicted Thursday, June 13, on healthcare fraud charges, federal officials said.

The Justice Department alleges that Chief Executive Ruthia He and company clinical President David Brody schemed to provide easy access to Adderall and other stimulants to patients who didn't need them — then billed insurance companies for the medication.

Representatives for Done did not immediately respond to a request for comment Thursday.

He and Brody are facing charges including conspiracy to distribute controlled substances, distribution of controlled substances, conspiracy to commit healthcare fraud and conspiracy to obstruct justice, court records show.

The charges mark the first time the Justice Department has prosecuted a digital health company in connection with distributing controlled substances through telemedicine.

Done, based in San Francisco, operated on a subscription model in which individuals paid a monthly fee in exchange for online diagnosis of ADHD, as well as subsequent treatment and medication refills.

Prosecutors allege that He and Brody arranged for the prescription of more than 40 million pills, including Adderall, and generated more than $100 million in revenue since the beginning of the COVID-19 pandemic.

The charges coincide with an ongoing shortage of several stimulant medications commonly prescribed to treat ADHD, according to the U.S. Centers for Disease Control and Prevention. A disruption "involving this large telehealth company could impact as many as 30,000 to 50,000 patients ages 18 years and older across all 50 U.S. states," the agency said.

"Instead of properly addressing medical needs, the defendants allegedly made millions of dollars by pushing addictive medications," said Anne Milgram, administrator of the U.S. Drug Enforcement Administration. "Any diversion of Adderall and other prescription stimulant pills to persons who have no medical need only exacerbates this shortage and hurts any American with a legitimate medical need for these drugs."

During the pandemic, the federal government expanded telemedicine rules to allow practitioners to prescribe controlled substances to patients virtually. Proponents say the flexibility allowed patients to continue receiving medical care at a time when meeting in-person risked exposure to COVID-19. However, it also prompted concerns that web-based platforms made it too easy to get potentially addictive medications.

In some instances, prosecutors allege, medical providers paid by Done based their diagnoses and prescriptions on a short video or phone conversation and using "limited patient intake documents." Other times, they prescribed without a video or phone call with the patient, according to the indictment.

Prosecutors also allege the company instituted an "auto-refill" policy that discouraged providers from following up with patients. They paid medical professionals solely based on the number of patients they wrote prescriptions for each month and refused to compensate them for follow-ups or other medical services provided after an initial consultation, the indictment said.

The company also allegedly collected insurance information from individuals and submitted it to pharmacies filling the prescriptions, causing the pharmacies to submit "fraudulent claims" to the insurance companies. Medicare, Medicaid and commercial insurers ultimately paid out roughly $14 million, prosecutors wrote in the indictment.

Officials allege Done was aware that some patients had overdosed and died on medication prescribed through its service. Done members described the company as a "straight-up pill mill" and a "drug-pushing scam to sell ADHD drugs and make a lot" of money, according to the indictment.

In May 2022, after mental health startup Cerebral received a grand jury subpoena indicating that it was being investigated, He and Brody allegedly became concerned they could be targeted in a similar probe. Prosecutors said they destroyed and concealed records and documents that could have been used by federal law enforcement investigators and began using encrypted messaging platforms instead of company email.

He and Brody were taken into custody and were expected to appear in court Thursday, records show. If convicted, they could face up to 20 years in prison.

The CDC has advised patients who use telehealth services and are running low on their current prescriptions to schedule an appointment with a healthcare provider as soon as possible.


©2024 Los Angeles Times. Distributed by Tribune Content Agency, LLC.
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