On May 10, two additional South Florida men pleaded guilty to conspiracy to commit healthcare fraud for their role in a diversion scheme involving the distribution of adulterated and misbranded diabetic test strips. The scheme involved the acquisition of non-retail or international diabetic test strips (i.e., diabetic test strips intended by manufacturers for distribution only outside of the United States), for sale to licensed retail pharmacies as retail diabetic test strips to make a higher profit. The fraud scheme resulted in around $12 million in fraudulent proceeds.
Howard Neil Frank, 60, of Marco Island, Florida, owner of two diabetic test strip wholesale businesses, Wholesale Diabetic Supplies Inc and HMF Distributing Inc, and Perfecto Fermin Hallon, 77, of Miramar, Florida, former president of another diabetic test strip wholesale business, Medical Care Supplies Inc, acquired the diabetic test strips through illegal importations, theft, or by buying the diabetic test strips from patients who obtained prescriptions but chose to sell them rather than use them. The wholesale company owners then sold the adulterated and misbranded diabetic test strips to licensed retail pharmacies, some of which they also owned. These licensed retail pharmacies sold the adulterated and misbranded diabetic test strips to patients who did not know the real source of the diabetic test strips. In turn, these licensed retail pharmacies then submitted claims for reimbursement through private and government health benefit plans as retail diabetic test strips.
To deceive auditors and inspectors, Frank and Hallon altered invoices, purchase orders and shipping records, counterfeited National Drug Code (NDC) numbers, bar codes and accompanying labeling, to appear like they had acquired the diabetic test strip from legitimate manufacturers. To date, a total of four defendants have been indicted in connection with this scheme.
