The tentacles of Southern California compound-drug schemes have reached across the country to New York, where an investment house has won a judgment against a drug compounder for allegedly selling it uncollectible receivables. 

Greg Sundem

Exhibits filed in the lawsuit by Shadow Tree Investment against Praxsyn Corp. reveals connections to three providers accused of accepting kickbacks from other compounding pharmacies. Praxsyn owns Mesa Pharmacy in Irvine, California.

Shadow Tree Investment Fund says in the civil complaint filed with the Westchester, New York, Supreme Court in November 2016 that it purchased three tranches of California workers’ compensation receivables for services provided by Mesa Pharmacy through companies affiliated with the chief executive officer of Praxsyn Corp.

Judge Alan D. Scheinkman in July awarded Shadow Tree $4.1 million in damages and attorney fees after entering an order of default because the affiliated companies, RMP Capital Corp., RMP Trade Credit, MedAR Finance and MedAR RMP, didn’t file a response to the complaint.

Scheinkman on Oct. 10 signed an order to show cause, directing Praxsyn and its chief executive officer, Greg Sundem, to return to his courtroom on Tuesday to explain why they should not be held in contempt for not informing the court or plaintiffs of lien settlements, and not turning over any of the money owed to Shadow Tree.

In support of the request to hold Sundem and Praxsyn in contempt, Shadow Tree filed an exhibit that it said was largely useless for determining what the defendants are doing with outstanding liens in California.

A memorandum filed at the same time by Patricia Habas, a partner with Rogers, Habas, Verrilli & Eisen in Orangeburg, New York, said it was able to discern that Praxsyn was settling some liens for less than 30% of the claimed value, but the spreadsheet doesn’t identify individual claims. Rather, the spreadsheet is segregated by prescriptions written for individual patients, making it impossible to identify the specific claims that were settled.

The spreadsheet, however, shows Mesa was partnering with three providers who now face criminal charges for accepting kickbacks to prescribe compound drugs to injured workers. The liens are filed under the name “Mesa Pharmacy Irvine.”

Neither Mesa Pharmacy nor Sundem have been charged with criminal fraud, but sources in Sacramento who worked on the drafting of legislation requiring the California Division of Workers’ Compensation to stay liens filed “by or on behalf” of providers charged with fraud said on Friday it would be reasonable to assume some of the Mesa liens could be subject to the stay.

The spreadsheet filed with the New York court identifies numerous case numbers for liens filed by Mesa for prescriptions written by Drs. Andrew Jarminski, Craig Chanin and Phong Tran. WorkCompCentral was unable to calculate the total number of liens linked to each provider, or the total claimed value for those liens because the 139-page spreadsheet is a locked PDF that can’t be readily imported into a program such as Excel.

Jarminski is accused of receiving more than $1.9 million in kickbacks for prescribing topical compound creams as part of the ongoing Landmark Medical case in Orange County. Prosecutors say that Kareem Ahmed, the president and chief executive for Landmark, paid numerous providers to prescribe compound creams he formulated based on the profitability of the ingredients.

Jarminski is also accused of involuntary manslaughter, along with Ahmed and pharmacist Michael Rudolph, who allegedly prepared some of the compounds for Landmark. The complaint alleges the three are responsible for the death of Andrew Gallegos, who was not yet 6 months old when he died in February 2012 after ingesting some of pain cream prescribed to his mother to treat a sore knee.

Prosecutors described the cream that killed Andrew Gallegos as synthetic morphine because it was 20% Tramadol, an opioid pain medication.

Chanin and his First Choice Medical Group are accused of receiving more than $700,000 in kickbacks as part of the alleged Landmark scheme.

Tran, meanwhile, is facing federal and state charges for allegedly participating in a kickback scheme orchestrated by Hootan Melamed, owner of New Age Pharmacy.

An indictment filed with the San Diego County Superior Court in January 2016 accused Tran of paying $86,500 in kickbacks to the owners of chiropractic clinics in exchange for the referral of workers’ compensation patients. A San Diego judge in May 2016 ordered Tran to stop practicing medicine until the case is resolved.

The next month, a federal grand jury indictment filed with the U.S. District Court for Southern California accused Tran of receiving kickbacks to prescribe compound creams and durable medical equipment from companies affiliated with Melamed.

The indictment claims Melamed paid Tran between $200 and $250 each time the doctor prescribed treatment with an interferential stimulator, or IF unit, that was supplied by Alexso Inc. He is also accused of receiving $150 to $200 for each prescription he wrote for Fluriprofen cream, and $150 for each prescription for Gabapentin cream, if the drugs were provided by Melamed’s New Age Pharmaceuticals, RoxSan Pharmacy or Concierge Compounding Pharmaceuticals.

Tran is also accused of receiving $50 for every prescription he wrote for a Terocin patch provided by one of Melamed’s companies.

Shadow Tree alleges in court filings that Mesa Pharmacy was paying illegal kickbacks to a company identified as “Trestles” in court filings. 

John Garbino, president of Trestles RX, pleaded guilty in June to receiving $926,563 in kickbacks to arrange for compound drug prescriptions. Garbino’s plea agreement is under seal with the U.S. District Court for Central California.

An affidavit filed in the case said Garbino, Trestles and a person identified as “D.F.” arranged for Trucare pharmacy in Corona to fill the prescriptions.

Although “D.F.” is not identified in the court documents, David Wayne Fish told WorkCompCentral in 2016 that he previously worked for Trestles but stopped in 2014. Fish was convicted of paying kickbacks in exchange for referrals through Premier Medical Management Systems Inc. in 2010.

WorkCompCentral is not aware of any other criminal charges filed against Fish.

Praxsyn Corp. in April said it stopped processing new prescriptions through Mesa Pharmacy but would continue to collect on outstanding accounts. At the same time, the company said it created Nevada Health Rx Inc., a closed-door retail pharmacy in Las Vegas that would focus on serving patients in Nevada, California and Arizona.

Praxsyn in 2016 announced plans to stop marketing compound creams to workers’ compensation patients in California because it was having a hard time collecting on the bills.