The founder and CEO and the clinical president of digital healthcare company Done Health, which provides psychiatric chronic care management, were arrested Thursday for allegedly participating in a scheme to distribute Adderall online, obstructing justice and conspiring to commit fraud.
According to the Justice Department, California-based Done Global Inc.’s founder and CEO, Ruthia He, and Done Health’s clinical president, David Brody, were arrested in connection with allegedly conspiring to commit healthcare fraud via submitting false and fraudulent claims for reimbursement for Adderall and other stimulants, obstructing justice and for allegedly participating in a scheme to distribute Adderall online.
“As alleged, these defendants exploited the COVID-19 pandemic to develop and carry out a $100 million scheme to defraud taxpayers and provide easy access to Adderall and other stimulants for no legitimate medical purpose,” Attorney General Merrick B. Garland said in a statement.
According to the indictment, He and Brody conspired with others to provide easy access to Adderall and other stimulants via telemedicine and spent tens of millions of dollars on deceptive social media advertisements.
The indictment alleges the pair gave access to Adderall other stimulants in exchange for payment of a monthly subscription fee. He and Brody allegedly unlawfully enriched themselves by increasing monthly subscription revenue, thereby increasing the company’s value.
“They generated over $100 million in revenue by arranging for the prescription of over 40 million pills,” principal deputy assistant attorney general Nicole M. Argentieri, head of the Justice Department’s criminal division, said in a statement.
He and Brody also allegedly structured the digital health platform to facilitate easy access to Adderall and other stimulants by mandating that prescribers’ initial encounters with members last less than 30 minutes and instructing prescribers to prescribe Adderall and other stimulants even if members did not qualify for the drug.
He also allegedly implemented an “auto-refill” function to allow subscribers to elect to have an auto-generated refill request each month.
The indictment alleges He and Brody persisted with the scheme even after being made aware that social media posts were made about how easy it was to obtain Adderall and other stimulants through Done’s platform and that Done members had overdosed and died.
The digital health executives also allegedly conspired to defraud pharmacies, commercial insurers, Medicaid and Medicare by causing the pharmacies to dispense Adderall and other stimulants to Done members and pay for the costs of the drugs while Done members continued to pay Done’s subscription fees.
The indictment alleges that Medicaid, Medicare, and commercial insurers paid more than approximately $14 million due to the fraud.
He and Brody also allegedly conspired to obstruct justice by deleting documents and communications in anticipation of a subpoena being issued to Done after another telehealth company received a grand jury subpoena. The two also communicated using encrypted messaging platforms instead of their company emails.
On Thursday, Brody was taken into custody in San Rafael, California, and He was arrested in Los Angeles. The executives each face a maximum of 20 years in prison if convicted.
The prosecutions are the first criminal drug distribution charges brought on by the Justice Department against a digital health company.
“Those seeking to profit from addiction by illegally distributing controlled substances over the internet should know that they cannot hide their crimes and that the Justice Department will hold them accountable,” Attorney General Garland said.