Pharmacist Pleads Guilty to Role in Texas Health Benefit Scheme

workmens-comp-formUnion health plans have become one of the largest targets of scams in this country. Nermin Awad El-Hadik, for one, is evidence of that. On November 9, El-Hadik, owner of a Houston-area pharmacy, pleaded guilty in U.S. District Court for the Western District of Texas to paying more than $5 million in kickbacks to an Austin-area chiropractor, part of a larger scheme that cost the Department of Labor tens of millions of dollars in questionable or false worker’s compensation claims. Ms. El-Hadik, who faces up to five years in prison, has agreed to make restitution. She remains free pending sentencing. This and related actions follow a joint investigation by the FBI, IRS, U.S. Army, U.S. Postal Service and U.S. Labor Department’s Office of Inspector General.

Union Corruption Update described this case at length last month. Garry Craighead, an Austin-area chiropractor, had been sentenced to 14 years in prison, plus three years of supervised release, for soliciting kickbacks from health care providers in return for steering Federal Employees Compensation Act (i.e., Worker’s Compensation) patients, many of them covered by union-sponsored plans, to those providers. He also used his influence to encourage doctors to refer additional drug compounding business to El-Hadik. Craighead, who operated eight physical rehab clinics across the state of Texas, pleaded guilty last December. He was sentenced this past June to 14 years in prison and three years of supervised release. He also was ordered to pay the Labor Department $17,908,170 in restitution and forfeit certain personal assets.

Nermin Awad El-Hadik, now 40, a resident of Bellaire, Tex., represented a large chunk of that money. El-Hadik was the owner of Hope Pharmacy, Inc. in the Houston area. During March to December 2015, she paid kickbacks totaling $5,334,303.04 to Craighead in exchange for a steady flow of federally-insured employees, many enrolled in union benefit plans, who would buy prescriptions at her business. In this way, her pharmacy could charge inflated prices for drug compounds. When Craighead pleaded guilty, it only was a matter of time before El-Hadik would go down.