Seven Defendants Charged In Health Care Fraud And Kickback Scheme Involving “Foot Baths”

Press Release

HARRISBURG - The United States Attorney's Office for the Middle District of Pennsylvania announced that the following individuals were indicted by a federal grand jury on charges of conspiracy to commit health care fraud and multiple counts of health care fraud:

• Frank Suess (a.k.a., Franz P. Suess), age 78, of Wellington, Florida;
• Luis Salgado, age 50, of Naperville, Illinois and Davenport, Florida;
• Melissa Driscoll, age 43, of East Stroudsburg, Pennsylvania;
• Victor Velazco, age 35, of Loxahatchee, Florida;
• Warren Pizik, age 68, of Davie, Florida;
• Dave Singh, age 37, of Pembroke Pines, Florida; and
• Diana Castro, age 53, of Brooklyn, New York.

Suess, Salgado, Driscoll, Velazco, and Pizik were also charged with conspiracy to violate the federal anti-kickback statute and with a number of individual violations of the same law. Finally, Suess, Driscoll, and Velazco were charged with conspiracy to obstruct a criminal investigation into health care offenses and falsification of records and information with the intent to obstruct a federal grand jury investigation, and with individual violations of the same laws.

According to United States Attorney Gerard M. Karam, the indictment alleges that between 2019 and 2020, all seven defendants conspired to commit health care fraud through an arrangement designed to bill individuals' health insurances for medically unnecessary prescription drug combinations known as "foot baths." Foot baths were purported to be an antibiotic and antifungal "foot soak" treatment that patients were supposed to mix together and dissolve in a warm water solution, using a plastic foot tub that was sometimes shipped to them. The combinations of prescription drugs contained in foot baths varied over time, but they generally included high-cost drugs that were not intended for or approved for use in a foot bath, including vancomycin capsules, tobramycin vials, calcipotriene cream, moxifloxacin eye drops, clindamycin phosphate solution, and ketoconazole cream. Vancomycin capsules, for example, were supposed to be prescribed to patients to treat particular conditions, such as MRSA and a type of diarrhea. Instead, foot bath recipients were told to break up the capsules on their own and dissolve the contents in the solution, which was not an approved method of taking the medication. Tobramycin vials were supposed to be used by licensed and trained healthcare professionals to administer injections to patients to treat certain bacterial infections. With foot baths, patients were instead inspected to empty the tobramycin vials into the solution, which was again not an approved method. The cost associated with such drugs was very high. For instance, the insurance for P.B., an individual who was allegedly prescribed foot baths without her consent, was billed $43,209.99 for a one-month supply of tobramycin vials and $12,476.54 for a one-month supply of vancomycin capsules. P.B.'s insurance ultimately paid approximately $4,271.04 for four total insurance claims.

Many of these allegedly fraudulent foot bath orders were routed through Sterling Pharmacy, a pharmacy located in Jermyn, Pennsylvania, in the Middle District of Pennsylvania. Melissa Driscoll purchased Sterling Pharmacy in March 2018 using funds that she obtained from Frank Suess, who, along with Victor Velazco, operated a group of companies located at the same address in Wellington, Florida. Sterling Pharmacy was one of a group of pharmacies used to carry out this alleged scheme. In addition, the defendants used unnamed pharmacies located in Texas and Florida as well.

Suess and Velazco allegedly used other people to become the owners of these pharmacies on paper in order to conceal their involvement in the business affairs of those pharmacies. Suess and Velazco then used those pharmacies to generate profits by steering high-cost prescription drug mail orders to those pharmacies. When the pharmacies were then investigated for those prescribing practices, Frank Suess, Victor Velazco, and Melissa Driscoll then used various tactics to conceal Suess and Velazco's use of those the pharmacies to carry out fraud.

The indictment alleges that Melissa Driscoll made various misrepresentations over time to conceal how Sterling Pharmacy was doing business, including concealing the pharmacy's mail order business from suppliers and falsely claiming that the pharmacy had a practice of verifying patient-prescriber relationships before filling prescription orders. The indictment also alleges that Suess, Velazco, and Driscoll engaged in a pattern of conduct to obstruct the government's investigation into Sterling Pharmacy and to create false business records in order to hide the fraudulent scheme from the government. Specifically, Sterling Pharmacy, through Melissa Driscoll, withheld records that the pharmacy was ordered to provide in response to a federal grand jury subpoena. In addition, Suess, Velazco, and Driscoll created false, backdated documents that were produced to the government via an unnamed attorney who represented them during the relevant time period. These documents made it appear that Sterling Pharmacy had a legitimate agreement with a company known as MedX Marketing Solutions, which was, on paper, supposed to be compensated on an hourly basis for marketing Sterling Pharmacy's offerings.

In reality, Sterling Pharmacy allegedly paid MedX kickbacks for the referral of signed foot-bath order forms for individual beneficiaries. These foot-bath orders were generated using templated forms that were provided to patient recruiters by Luis Salgado, the CEO of MedX. These patient recruiters included a diabetic shoe salesman working at a shopping mall in the area of Scranton, PA, as well as a group of individuals who set up "health fairs" in New York. As a result of health fairs and associated patient recruitment activity in New York, Sterling Pharmacy received hundreds of foot-bath prescription order forms approved by Diana Castro, a podiatrist based in Brooklyn. Castro attended multiple health fairs, where she authorized foot bath orders despite their lack of medical necessity. She was paid for these appearances in cash.

A large number of foot-bath orders were processed using the medical identification number of a physician with a name similar to that of Diana Castro. The use of this other medical provider's National Provider Identifier ("NPI"), without the provider's knowledge, was accomplished using a signature stamp containing Diana Castro's name and the other physician's NPI. This fraudulent activity led to hundreds of foot bath claims being billed and paid out under that provider's NPI between about December 2019 and the middle of 2020. One health insurance fund paid approximately $685,000 just for these claims.

Warren Pizik and Dave Singh allegedly assisted Luis Salgado in the marketing of Sterling Pharmacy's mail order business and in setting up out-of-state pharmacy licenses. Pizik and Singh also communicated with Salgado, Suess, and Velazco throughout the relevant time period via email and phone. This group regularly exchanged emails with one another, including ones in which patients complained about not wanting foot baths, not knowing Diana Castro or having ever seen a foot doctor, having their insurance "charged a lot of money," being "freaked out" because there were no instructions regarding what to do with the medications, and being "scared of the box" of foot baths because it contained "such a huge amount of meds." At times, Driscoll also communicated by email, writing to Velazco to report, "These insurance companies hate foot baths" after receiving "another" payment reversal from an insurance company.

It is alleged that Melissa Driscoll, through Sterling Pharmacy, paid MedX $312,192.28 in kickbacks and paid Warren Pizik another $22,000 in kickbacks for MedX referrals. Melissa Driscoll, through Sterling Pharmacy, allegedly paid Frank Suess and Victor Velazco's companies more than $1 million in additional kickback payments.

The indictment contains forfeiture allegations seeking approximately $1.3 million as a money judgment from the defendants. The United States is also seeking forfeiture of the property used by Frank Suess and Victor Velazco to carry out the scheme, which was an office building in Wellington, Florida where their various businesses were located. Finally, the United States is seeking forfeiture of a residential property located in Naperville, Illinois that Luis Salgado purchased using proceeds of the scheme.

The case was investigated by the U.S. Department of Health and Human Services Office of Inspector General and the Federal Bureau of Investigation. Assistant U.S. Attorney Ravi Romel Sharma is prosecuting the case.

The maximum penalty under federal law for conspiracy to commit health care fraud and for individual violations of the health care fraud statute and the Anti-Kickback Statute is 10 years of imprisonment, a term of supervised release following imprisonment, and a fine, for each offense. The maximum penalty under federal law for conspiracy to violate the Anti-Kickback Statute, for conspiracy to obstruct a health care investigation and falsify records in an investigation, and for obstructing a health care investigation is 5 years of imprisonment, a term of supervised release following imprisonment, and a fine, again for each offense. The maximum penalty under federal law falsifying records in an investigation is 20 years of imprisonment, a term of supervised release following imprisonment, and a fine.

A sentence following a finding of guilt is imposed by the Judge after consideration of the applicable federal sentencing statutes and the Federal Sentencing Guidelines.

Indictments and Criminal Informations are only allegations. All persons charged are presumed to be innocent unless and until found guilty in court.

# # #

Updated November 18, 2024