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April 23, 2013 Healthcare Fraud

Florida-Based Pharmacy Owner Sentenced for Illegal Kickbacks and Medicare Fraud

A Miami-based pharmacy owner was sentenced to 168 months in prison for his role in a Medicare fraud and illegal kickback scheme. Jose Carlos Morales, the co-owner of Pharmovisa, Inc. and PharmovisaMD, plead guilty to one count of conspiracy to commit healthcare fraud and one count of conspiracy to pay illegal healthcare kickbacks. According to the Department of Justice (DOJ), Morales is responsible for submitting false and fraudulent reimbursement medical claims to government agencies totaling around $23,367,775. In addition to his prison term, Morales was sentenced to serve three years of supervised probation after his release and pay a $100,000 fine.

Details of the Fraud

Using both Pharmovisa and PharmovisaMD as dummy corporations, Morales operated three separate pharmacies, which were all located in Miami, Florida. Morales allegedly paid illegal healthcare kickbacks to multiple co-conspirators in exchange for an unending stream of Medicare and Medicaid beneficiaries’ information that was used to submit claims to government healthcare agencies. The patients who were referred to Morales’ pharmacies in the illegal kickbacks scheme all resided at local assisted living facilities located around Miami.

Morales also paid illegal kickbacks to several Miami doctors in return for prescription referrals. Once the patients were referred to Morales’ pharmacies, he billed Medicare for reimbursement of services.


One of Morales’ most elaborate Medicare fraud schemes involved the double billing of both Medicare and Medicaid for unused pharmaceuticals. Since 2007, Morales orchestrated this scam, which spanned the entire Southern District of Florida.

The medications in question were packaged in pop-out cards, allowing patients or medical providers to dispense one pill at a time through a foil lining on the back of the cards. Morales referred to the packages as “bingo cards.”

Morales employed several drivers for all three pharmacies and they routinely delivered medications to multiple assisted living facilities in Southern Florida. Following directions allegedly given by Morales, the drivers collected any unused bingo cards from the assisted living facilities and brought them back to the pharmacy. Once back in his possession, Morales ordered pharmacy employees to remove all of the unused medications from the bingo cards and then repackage them in pill bottles. Once in bottles, the pills were dispensed to other patients and the pharmacies would simply double-bill Medicare or Medicaid for the medication.

Covering Up Illegal Kickbacks

Adding another layer to his fraudulent activity, Morales directed pharmacy employees to place both unused and used medications into new bottles for resale. These medications were actually sold over the counter (without a prescription) to the general public from “community pharmacy shelves.”

In an attempt to cover their tracks, Morales and his co-conspirators concocted false and fraudulent financial transactions, hoping to disguise the constant flow of illegal income. Each of the phony financial transactions involved dummy corporations that were either owned or operated by the Medicare fraud scheme participants.

In 2012, one of Morales’ co-conspirators, Esperanza Navailles, plead guilty to conspiracy to defraud the United States and pay illegal healthcare kickbacks. Navailles worked as a marketer for all three of Morales’ pharmacies. At the direction of Morales, Navailles paid area assisted living facility owners and operators approximately $30 for every Medicare beneficiary that was referred to the pharmacies. These fees were paid on a monthly basis from February 2011 to January 2012. After the patients were referred to Morales’ pharmacies, Medicare reimbursement claims were submitted for medication and services that were provided to beneficiaries. According to court documentation, Navailles admitted that she knew the payments she provided to assisted living facility administrators were considered illegal kickbacks.