Two charged in $10 million insurance fraud; used Jeep employees to facilitate

Apr. 12—Two men are charged with stealing more than $10 million from insurance companies through a fake prescription scheme that a federal prosecutor alleges used Jeep employees to facilitate the fraud.

Kevin Clay, age unknown, of Perrysburg and Matthew Maluchnik, whose age and address were both undisclosed, are both charged in U.S. District Court in Toledo for allegedly defrauding insurance companies by collecting a percentage of insurance reimbursements for medically unnecessary medications and failing to tell the companies that the patients were being paid for their own prescriptions, according to an indictment recently unsealed in court.

Jeep employees were targeted because their insurance companies — Medical Mutual of Ohio and Blue Cross and Blue Shield — covered compound creams and medications, which can range in price from several hundred dollars to more than $10,000 per prescription, according to court records.

Mr. Clay and Maluchnik met with an unidentified pharmacy owner in Cleveland and the owner agreed to fill prescriptions, manufacture the creams, and bill the individual insurance company. The owner would take approximately 70 percent of the insurance money and paid the rest to Mr. Clay and Maluchnik, who planned to pay individual "sales representatives" a commission for prescriptions, according to an indictment. The pharmacy owner also provided prescription pads for the creams to give to the patients.

They each separately face allegations of falsifying tax records — including allegations in contributions given to the Stella Bertz Cheer for a Cure Foundation and the Clay Foundation, according to court records.

Mr. Clay was indicted for charges of conspiracy to commit healthcare fraud, healthcare fraud, and two counts of giving a false statement. The indictment further outlines actions taken by others involved, even though they were previously indicted.

Maluchnik was indicted in September for healthcare fraud and two counts of giving a false statement. He pleaded guilty at his arraignment on Sept. 29, but court records show he has not been sentenced as of Monday.

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In a "test run," Maluchnik went to a person only identified in court documents as S.H., a Perrysburg doctor, and requested pain cream. S.H. filled out the prescription on the pharmacist's provided prescription pad. The pharmacy then fulfilled the prescription and paid Mr. Maluchnik weeks later for his own prescription, according to records.

Maluchnik then recruited Loni Peace, a family member who worked for Fiat Chrysler Automotive at Jeep in Toledo. He asked Peace to recruit other Jeep employees to obtain compounding prescriptions.

Pre-formulated prescription forms were used prior to being evaluated by a doctor. That form was then submitted to S.H. for approval based on the recruited beneficiaries' request for a compounded medication. Once the prescription was filled by the pharmacy, Mr. Clay and Maluchnik provided a kickback to the patient and recruiters in the form of an IRS Form 1099 from Theramedical, LLC, a company they founded to market compound pain and scar creams.

In 2014, S.H. prescribed at least $7.37 million worth of compounding creams and at least $3.19 million in 2015, records show. Approximately $3.74 million of those were for Jeep employees who received payment for their personal prescriptions.

"The ultimate goal was to generate as many prescriptions for pre-formulated, expensive, and medically unnecessary compounded medications, rather than prescribe an FDA-approved medication or a medication tailored made to the unique requests of the patient," the indictment against Mr. Clay states.

Peace faces a charge of healthcare fraud as part of Mr. Clay's and Maluchnik's plan, and she too pleaded guilty during arraignment on Feb. 26. A sentencing date is set for June 21, which is the same date as a pretrial hearing for Mr. Clay.

Separately, Maluchnik, identified as the executive director for Stella Bertz Cheer for a Cure, claimed contributions of approximately $587,448, when he knew they were substantially less than that amount, according to an indictment.

Maluchnik approached friends, Matthew Ports, Tracy Eisaman, and Robert Lee, who worked for Pfizer and Amgen pharmaceutical companies. Both companies matched their employees' charitable donations dollar-for-dollar, according to conspiracy to defraud the U.S. allegations filed against Mr. Ports on April 1.

Maluchnik then provided these individuals with cash ranging from $15,000 to $20,000 and the three employees then submitted matching requests to Pfizer and Amgen, falsely claiming they donated to the charity — when they actually donated nothing, court records say.

The three each claimed a deduction in the amount purportedly given to Stella Bertz Cheer for Cure on their 2014 U.S. income tax returns, reducing their overall taxable income. Maluchnik also failed to disclose that Stella Bertz Cheer for a Cure received money from Pfizer and Amgen in 2015.

Eisaman and Lee have subsequently entered pleas to providing a false statement and will be sentenced at a later date.

The separate indictments also identify funds, vehicles, and property that will be forfeited because they were from the gross proceeds traceable to the healthcare fraud violations. Maluchnik, alone, agreed to forfeit approximately $870,330, along with a 2014 Land Rover Range Rover, gold and silver bars.

At least one other individual has not been charged as of Monday.

The Blade attempted to reach the defendants' attorneys, but they declined to comment or did not respond.

First Published April 12, 2021, 5:19pm