The insurance fraud, according to sources, was a scheme involving corrupt doctors and pharmaceutical suppliers and a medication known as a compounded pain management cream – a multi-ingredient topical cream described in a recent article from the Coalition for Insurance Fraud as the “snake oil” of the 21st century. It is used to treat joint and muscle pain.
Insurance companies have been billed millions of dollars for the cream, according to government reports and investigations from various parts of the country. How and when the mob got involved remains unclear, but sources say New York mobsters brought the scam to Florida where Merlino and his associates set up a system in which “patients” would visit doctors who wrote prescriptions for the cream, which was then supplied by mob-linked “compounding pharmacies.” Those suppliers would then bill insurance companies hundreds of thousands of dollars.
“A single tube can retail for up to $10,000,” according to an article that appeared in June in the Journal for Insurance Fraud in America. “Each new prescription — often offered as a 'trial’ — authorizes 10 refills. One 'trial prescription’ for one patient thus can generate nearly $100,000.”
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