CAMDEN — Northfield resident Tom Sher and another firefighter were sentenced to prison Wednesday, July 12, for their respective roles in a multimillion-dollar health care fraud conspiracy, U.S. Attorney Vikas Khanna announced.
Sher, 50, was sentenced to 96 months in prison. The former Margate firefighter was found guilty Sept. 8, 2022, of one count of conspiracy to commit health care fraud and three counts of health care fraud following a 12-day trial before U.S. District Judge Robert B. Kugler in Camden federal court.
Sher’s brother John Sher, also a former Margate firefighter, was sentenced to 37 months in April. Another brother, Michael Sher, has also pleaded guilty.
Christopher Broccoli, 51, of West Deptford, was sentenced to 24 months in prison. Broccoli, a Camden firefighter, pleaded guilty before Judge Kugler on July 28, 2022, to a superseding information charging him with one count of conspiracy to commit health care fraud.
Other area residents who have been indicted and/or pled guilty to charges in the conspiracy include former Northfield Board of Education member Mark Bruno; Northfield residents Sara Hickman, Richard Zappala and Michael Pepper, Linwood residents Nicholas Tedesco and John Gaffney; and Upper Township resident Shawn Sypher.
According to documents filed in these cases, statements made in court, and the evidence at trial:
Sher and Broccoli were part of a criminal conspiracy in which state and local government employees were recruited and compensated to receive medically unnecessary compound prescription medications. Sher and his direct conspirators recruited almost 70 people into the scheme and caused the pharmacy benefits administrator to pay out more than $7 million for medically unnecessary compound prescription medications.
Sher directly received about $115,000 from the scheme. During the sentencing, Kugler likewise found that Sher obstructed justice when he lied during his trial testimony and when he attempted to tamper with witnesses and devise a cover-up story in advance of trial.
Broccoli caused the pharmacy benefits administrator to pay out millions of dollars for medically unnecessary compound prescription medications for individuals he recruited into the scheme and directly received $150,315.
To date, 50 people have been charged in the overarching conspiracy, and 46 defendants have pleaded guilty or been convicted at trial.
Another Northfield man, William Hickman, pleaded guilty June 16, 2020, to leading the conspiracy.
According to documents filed in this case and statements made in court:
Hickman was a sales representative for a pharmaceutical company. He created a side business called Boardwalk Medical LLC in his wife’s name to sell medical products for other companies, an activity that was prohibited by his employer.
As part of his side business, Hickman started persuading patients to receive compounded medications, which are specialty medications mixed by a pharmacist to meet the specific medical needs of an individual patient. Hickman learned that certain insurance plans administered by an entity referred to in the indictment as the “Pharmacy Benefits Administrator” would reimburse thousands of dollars for a one-month supply of certain compounded medications — including pain, scar, anti-fungal and libido creams, as well as vitamin combinations.
He also learned that many New Jersey state and local government and education employees, including teachers, firefighters, police officers and State Police troopers, had the insurance coverage. The Pharmacy Benefits Administrator would pay prescription drug claims and then bill the state for the amounts paid.
Hickman marketed compounded medications for several pharmacies, including the Louisiana pharmacy identified in the indictment as “Compounding Pharmacy.” His initial work for Compounding Pharmacy was through an intermediary who paid Hickman a commission if patients he found received compounded medications covered by insurance.
In early 2015, however, Hickman struck his own deal to be a master distributor for Compounding Pharmacy. Under his deal, Compounding Pharmacy agreed to pay Boardwalk Medical 40 percent or more of the insurance payments received for prescriptions obtained by Hickman and the recruiters working for him.
Hickman then created a network of conspirators to work under him to find patients, including Michael Sher, Linwood resident Matthew Tedesco (both of whom have pleaded guilty to conspiracy to commit health care fraud) and Brian Pugh. The conspirators working for Hickman found additional patient recruiters and brought them into the conspiracy:
Hickman agreed to pay the conspirators working under him a percentage of the insurance reimbursement that he received from Compounding Pharmacy, and they paid recruiters working under them.
Hickman told his recruiters to find New Jersey public employees and other people with insurance coverage administered by Pharmacy Benefits Administrator. He gave them blank Compounding Pharmacy prescription forms and told them which medicines had the highest insurance reimbursement and to check off 12 months of refills.
Hickman also told his recruiters that he had a doctor who would sign prescriptions without seeing the patients. Dr. John Gaffney, who has pled guilty to conspiracy to commit health care fraud, signed numerous prescriptions at Hickman’s request without seeing the patients or determining that they had a medical necessity for the specially compounded medications.
Based on the instructions he gave them, Hickman’s conspirators recruited New Jersey public employees and others to fraudulently obtain compounded medications from Compounding Pharmacy that the patients did not need, often without a doctor seeing the patients or determining that the medications were medically necessary.
Hickman and the conspirators working for him paid individuals for receiving Compounding Pharmacy prescription medications. If the patients did not see their own doctor, recruiters would give Hickman prescriptions that were completed except for the doctor’s signature, and Hickman would have Gaffney sign the prescription.
The completed prescriptions were faxed to Compounding Pharmacy, which filled the prescriptions and billed the Pharmacy Benefits Administrator.
Compounding Pharmacy paid Boardwalk Medical for each Hickman prescription filled and paid by Pharmacy Benefits Administrator. Pharmacy Benefits Administrator paid Compounding Pharmacy over $50 million for compounded medications, and Compounding Pharmacy paid William Hickman over $26 million for prescriptions obtained by Hickman and his conspirators.
Hickman paid a portion of that amount to his recruiters, and they paid the recruiters under them. Hickman admitted paying Pugh approximately $435,000 in criminal proceeds over five months. Those payments provided the basis for the money laundering conspiracy charge to which Hickman pleaded guilty.
The health care fraud and wire fraud conspiracy count to which William Hickman pleaded guilty carries a maximum potential penalty of 20 years in prison and a $250,000 fine, or twice the gain or loss from the offense. The money laundering conspiracy charge carries a maximum potential penalty of 10 years in prison and a $250,000 fine, or twice the value of the property involved in the transaction.
In his plea agreement, William Hickman agreed to pay restitution of $53,037,639 and to the entry of a forfeiture money judgment for $26,241,327. Hickman also agreed to forfeit specific property obtained with criminal proceeds, including five investment accounts and four real estate parcels.
According to the indictment, from July 2014 to April 2016, the Hickmans recruited individuals in New Jersey to acquire medications from a Louisiana pharmacy. The prescriptions were “very expensive and medically unnecessary compounding medications,” the press release stated.
“The conspirators learned that certain compound medication prescriptions — including pain, scar, antifungal and libido creams, as well as vitamin combinations — were reimbursed for thousands of dollars for a one-month supply,” the release stated.
The Louisiana pharmacy allegedly agreed to pay Boardwalk Medical LLC, a company that William and Sara Hickman ran, a percentage of the amount that the pharmacy received for the prescriptions obtained by Boardwalk Medical and its associates. Pugh and others allegedly recruited people who had insurance coverage for compounded medications.
Those charged also reportedly found additional recruiters, allegedly including Schallus, John Sher, Broccoli and Thomas Sher. Both Shers are Margate firefighters, while Schallus is a detective in the Ventnor Police Department.
Those involved allegedly recruited public employees to obtain the compounded medications. They allegedly helped people to receive prescription medications from the pharmacy.
Hickman allegedly paid Dr. Jon Gaffney in exchange for signing prescriptions. Last year, Gaffney pleaded guilty for conspiracy to commit health care fraud. He also admitted to taking payments and signing prescriptions for patients he did not see.
Other area residents who have been indicted and/or pled guilty to charges in the conspiracy include former Northfield Board of Education member Mark Bruno; Northfield residents Sara Hickman, Richard Zappala and Michael Pepper, Linwood residents Nicholas Tedesco and John Gaffney; and Upper Township resident Shawn Sypherd.
By CRAIG D. SCHENCK/Sentinel staff
