Melamed, Pharmacist in Workers’ Compensation Kickback Fraud Scheme, Sentenced to 6 Months, $1.4M Forfeiture

Hootan Melamed, the pharmacist whose kickback scheme resulted in losses to insurance carriers of between $9 million and $20 million, has been sentenced to a 6 month jail term, and must repay $1.4 million in an asset forfeiture. Prosecutors had sought a sentence of 21 months in light of his prior fraud conviction, but did not seek restitution. A sentencing memo noted that “Parties agree that a reasonable estimate of the loss, including an estimated offset for the fair market value of any prescriptions that were not kickback-tainted, is between $9.5 (million) and $19.8 million,” but the prosecutors noted that previous similar cases found carriers “were not owed restitution because, while there was evidence that the financial incentive did result in an increased number of medically unnecessary recommendations by the physicians, it was unclear to what extent that occurred.” The judgment requires Melamed, who entered a plea agreement in November of 2020, to turn himself in and serve his sentence by October 1st, 2021.

Melamed was accused of masterminding a kickback and fraud scheme that involved a number of accomplices in a conspiracy to refer patients to his pharmacies to fill prescriptions, resulting in close to $200 million in fraudulent workers’ compensation billings. The scheme previously resulted in charges and convictions against several co-conspirators, including anesthesiologist Dr. Amir Friedman, medical marketer John Pangelian, Dr. Phong H. Tran, Jean Picard, and Jonathan Pena.