7 NJ Residents Charged in $50M Health Care Fraud Scheme - NECN
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7 NJ Residents Charged in $50M Health Care Fraud Scheme

"I’m angry. I’m disappointed that this happened"

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    7 NJ Residents Charged in $50M Health Care Fraud Scheme
    NBC10
    The defendants allegedly defrauded state health benefits programs and other insurers out of more than $50 million, federal officials said.

    A police officer and three firefighters were among seven people indicted this week in an alleged $50 million prescription drug scheme involving public employees, the latest charges in an investigation that has already produced nearly two dozen guilty pleas.

    A 50-count indictment unsealed Friday by the U.S. attorney's office in Camden, New Jersey, charged the seven people with health care fraud, wire fraud and conspiracy. Twenty-three people already have pleaded guilty in connection with the investigation, according to the U.S. attorney's office.

    "It’s a sad day in Margate," Mayor Michael Becker said. "I’m angry. I’m disappointed that this happened."

    Named in the indictment were William Hickman, a pharmaceutical sales representative; his wife, Sara Hickman, the founder of a medical supply company; Ventnor police officer Thomas Schallus; brothers John Sher and Thomas Sher, both Margate firefighters; Camden firefighter Christopher Broccoli; and business owner Brian Pugh.

    In addition to the conspiracy and fraud charges, which carry maximum penalties of between 10 and 20 years per count, the Hickmans and Pugh were charged with money laundering and money laundering conspiracy.

    Michael Sher, brother of John and Thomas Sher and a former firefighter in Margate, was listed in the indictment as a co-conspirator. He pleaded guilty last year.

    "The U.S. Attorney’s office is smearing Brian’s name," Pugh's lawyer, Mike Baldassare, said. "He’s a hard-working local businessman, he’s presumed innocent.” 

    Shallus, a 19-year police veteran, was suspended without pay, according to Vetnor Police Chief Douglas Biagi. 

    “This incident and the indictments will not affect the day-to-day operations of the Ventnor City Police Department or the public safety aspect of it," Biagi said. "We persevere and we move on from situations like this and we’ll have to see how it all unfolds in the future.”

    According to the indictment, the defendants exploited the fact that some state and local government employees had insurance that covered expensive compound medications such as pain, scar, antifungal and libido creams. Reimbursements ran as high as thousands of dollars for a one-month supply.

    Sara Hickman's company, Boardwalk Medical, of Northfield, allegedly was paid a percentage of the amount a Louisiana-based compounding pharmacy, not identified in court papers, received from a state benefits administrator for prescriptions received.

    Sara Hickman and William Hickman allegedly paid others, including Pugh, to recruit public-sector employees who would obtain the expensive prescriptions they didn't need, and without seeing a doctor.

    John Gaffney, a doctor based in Margate, pleaded guilty in 2017 to health care fraud for signing bogus prescriptions for patients he never saw. He faces up to 10 years in prison and is scheduled to be sentenced in July.