Four Convicted in Multi-Million-Dollar Hemophilia Medication Kickback Scheme

United States Attorney Kenyen R. Brown announces today that a federal jury has convicted Lori Brill, Butch Brill, Jeff Vernon, and Chris Vernon of various charges arising out of their participation in a scheme to bill Alabama Medicaid for unnecessary hemophilia medication and to supply inducements, in the form of illicit commission payments, for Medicaid referrals.

In announcing the convictions, Mr. Brown stated, “Health care fraud in the United States costs consumers billions of dollars, whether the victim is a private medical insurer or a public program such as Medicaid. Individuals exhibiting sheer greed through extensive fraudulent billing and awarding improper inducements for Medicaid business are driving up health care costs and are depriving those who really need medical assistance as provided by these government funded programs. Our office, in conjunction with our law enforcement partners, will aggressively continue to safeguard precious taxpayer dollars, protect our nation’s most essential health care programs, and dismantle criminal networks that bilk the system.”

Mobile Division Special Agent in Charge, Lewis M. Chapman, stated: “This conviction sends a strong message to those who abuse our tax dollars to enrich themselves that they will be identified, caught, and punished.” Chapman further stated: “This conviction was also the direct result of a strong interagency effort which allowed the leveraging of resources and strengths to achieve this outcome.” Anyone with information regarding such fraudulent activity is encouraged to contact the FBI.

The evidence at trial demonstrated that Lori Brill (“Brill”), mother of a hemophiliac son, ran a hemophilia care company known as Hemophilia Management Specialties, Inc. (“H.M.S.”), which provided cost free services to clients who suffered from hemophilia, including, among other things, ordering their extremely expensive medication called “Factor” through MedfusionRx, L.L.C., a speciality pharmacy owned and operated by brothers Jeff and Chris Vernon. The Factor costs of hemophilia sufferers can, on average, be in the hundreds of thousands of dollars each year. In fact, in 2009 alone, Alabama Medicaid reimbursed specialty pharmacies over $21 million for the Factor claims of just 87 hemophilia sufferers, most of whom were children. In an effort to increase commissions received from Medfusion, Brill worked with her estranged husband Butch Brill and H.M.S. employees Ashley Sprinkle and Sherry Demouey, both of whom previously pleaded guilty to health care fraud charges stemming from their roles in this scheme, to falsify the Factor tracking logs of H.M.S. clients. Together, and at the direction of Lori Brill, they manipulated logs to indicate that H.M.S. clients took the maximum amount of Factor at the greatest frequency allowed under their prescriptions without verifying the clients’ actual usage. These logs were then forwarded to Medfusion to order more Factor medication. In turn, the unnecessary medication was billed to Medicaid. One hemophilia client whose logs were manipulated was Travis Goodwin, who pleaded guilty just before trial to aiding and abetting healthcare fraud. Based on this scheme, the jury convicted Lori and Butch Brill of conspiracy to commit healthcare fraud, pursuant to 18 U.S.C. § 1349.

The trial evidence further demonstrated that Jeff Vernon and Chris Vernon paid illicit kickbacks to Brill and another patient manager, Leroy Waters, himself a hemophilia sufferer, in order to induce them to fill their Medicaid clients’ Factor prescriptions at Medfusion. Brill had an unlawful commission agreement with the Vernons whereby she received commissions equal to 45 percent of the profits the pharmacy generated by filling the Factor prescriptions of H.M.S. clients who were Medicaid recipients. Likewise, the Vernons and Waters had an illegal commission agreement which mirrored Brill’s, with Waters receiving commissions totaling 50 percent of the profits Medfusion brought in from filling his Medicaid clients’ Factor prescriptions. Waters pleaded guilty just before trial to a substantive anti-kickback charge due to his receipt of these illicit commissions. Based on this scheme, the jury convicted Lori Brill and Chris Vernon of three substantive charges of violating the anti-kickback statute, pursuant to 42 U.S.C. § 1320a-7b(b). The jury convicted Jeff Vernon of one count of conspiracy to violate the anti-kickback statute, pursuant to 18 U.S.C. § 371, and six substantive counts of violating the statute.

Sentencings for Lori Brill, Butch Brill, Jeff Vernon, and Chris Vernon are set for June 11, 2012.

In the interim, the United States will be seeking money judgments against all defendants totaling approximately $5 million dollars.

The case was jointly investigated by the Federal Bureau of Investigation and the Department of Health and Human Services-Office of Inspector General. Assistant United States Attorneys Gregory A. Bordenkircker, Adam W. Overstreet, and Christopher J. Bodnar, prosecuted the case for the United States.