A teacher at the Jersey Shore became the 14th person to admit to a role in a $50 million health benefits scheme when he pleaded guilty to conspiring to commit health care fraud in federal court in Camden on Friday.
Shawn Sypherd, 46, of Marmora, defrauded New Jersey health benefits programs and other insurers of more than $2 million by submitting fraudulent claims for expensive and medically unnecessary prescriptions, and by receiving kickbacks to recruit other government employees to do the same.
The scheme involved pharmaceutical sales representatives and doctors who processed phony claims on behalf of teachers, firefighters, police, state troopers, and other public employees, who in turn were paid for submitting false claims to a Pennsylvania compounding pharmacy, federal prosecutors said.
The pharmacy would mail specialty pain, scar, anti-fungal and libido creams, and vitamin preparations, which cost more than $1,000 for a one-month supply, to members of local and state public health benefits plans in New Jersey that offered coverage for these medications, authorities said. Authorities have not publicly identified the pharmacy.
Prosecutors said compounded drugs are not approved by the Food and Drug Administration but are prescribed when doctors determine that such a drug would be more effective for a patient than an FDA-approved medicine, and if there are concerns about allergies.
Sypherd appeared before U.S. District Judge Robert B. Kugler and admitted he served as a recruiter between January 2015 and April 2016. He received about $354,264 from the scheme after paying cash to health-plan members who agreed to participate in the fraud. Under the terms of the plea agreement, he may be ordered to pay more than $2.4 million in restitution when he is sentenced on June 1.
Sypherd also faces a maximum of 10 years in prison and a $250,000 fine.
Thirteen other conspirators – Matthew Tedesco, Robert Bessey, Michael Pepper, Thomas Hodnett, Steven Urbanski, John Gaffney, Judd Holt, George Gavras, Richard Zappala, Michael Neopolitan, Andrew Gerstel, Timothy Frazier, and Michael Pilate – await sentencing after entering guilty pleas starting last August.
Authorities identified Tedesco, a Linwood pharmaceutical representative, as the ringleader. Tedesco pleaded guilty in August to receiving more than $11 million from the pharmacy, a portion of which he passed along to other co-conspirators.
Interim U.S. Attorney Craig Carpenito credited agents with the FBI, IRS, U.S. Department of Labor, Office of Inspector General, and state Attorney General's Office for helping with the investigation.