2 Atlantic Co. Men Admit To Health Care Fraud: Officials

ATLANTIC COUNTY, NJ — Two South Jersey men admitted to defrauding New Jersey state and local health benefits programs and other insurers by submitting fraudulent claims for medically unnecessary prescriptions, Attorney for the United States Vikas Khanna said Wednesday.

Brian Pugh, 45, of Absecon, and Thomas Schallus, 45, of Northfield, pleaded guilty before U.S. District Judge Robert B. Kugler to one count each of conspiracy to commit health care fraud, Khanna said.

According to documents filed in the case and statements made in court, Pugh and Schallus were part of a criminal conspiracy where state and local government employees were recruited and compensated to receive medically unnecessary compound prescription medications, Khanna said.

For these unnecessary prescriptions, Pugh and Schallus caused the pharmacy benefits administrator to pay about $1.47 million and $477,958.00, respectively, Khanna said.

The two men were previously charged on an indictment with others with conspiracy to commit health care fraud and wire fraud and other offenses, Khanna said. The scheme's leader, William Hickman, pleaded guilty in June 2020 to defrauding New Jersey health benefits programs and other insurers out of more than $50 million and is awaiting sentencing, Khanna said.

Charges remain pending against co-defendants John Sher, Thomas Sher and Christopher Broccoli, who are set to proceed to trial before Judge Kugler in Camden federal court on Aug. 15, 2022, Khanna said.

Pugh and Schallus each face a maximum penalty of 10 years in prison and a $250,000 fine, or twice the gross gain or loss from the offense. Sentencing for Pugh is scheduled for Nov. 17, 2022, and for Schallus, Nov. 14, 2022.

Khanna credited agents of the FBI’s Atlantic City Resident Agency, under the direction of Special Agent in Charge Jesse Levine in Newark; special agents of IRS Office of Criminal Investigation, under the direction of Acting Special Agent in Charge Tammy Tomlins in Newark; and special agents of the U.S. Department of Labor Office of Inspector General, New York Region, under the direction of Special Agent in Charge Jonathan Mellone, with the investigation leading to the guilty pleas.