Two top executives at California-based telemedicine company Done were indicted on medical fraud charges Thursday, potentially disrupting access to attention deficit hyperactivity disorder treatment for as many as 50,000 U.S. patients, federal officials said.
The Justice Department alleges that CEO Ruthia He and the company’s clinical president David Brody planned to provide convenient services to patients who didn’t need Adderall and other stimulants and then bill insurance companies for the drugs.
Representatives for Done did not immediately respond to a request for comment Thursday.
He and Brody face charges including conspiracy to distribute a controlled substance, conspiracy to distribute a controlled substance, conspiracy to commit health care fraud and conspiracy to obstruct justice, court records show.
The charges mark the first time the Justice Department has prosecuted a digital health company for distributing controlled substances through telemedicine.
Based in San Francisco, Done operates a subscription model in which individuals pay a monthly fee in exchange for an online diagnosis of ADHD as well as follow-up treatment and medication refills.
Prosecutors say he and Broidy arranged for more than 40 million prescriptions for pills, including Adderall, to be filled since the COVID-19 pandemic began and generated more than $100 million in revenue.
The charges are related to ongoing shortages of several stimulant drugs commonly used to treat ADHD, according to the Centers for Disease Control and Prevention. The agency said “disruptions involving this large telemedicine company could affect as many as 30,000 to 50,000 patients 18 and older in all 50 states.”
“Instead of properly addressing medical needs, the defendants allegedly made millions of dollars by promoting addictive drugs,” said DEA Director Anne Milgram. “Anyone who sells Adderall and other prescription stimulant drugs Diversion to people with no medical need will only exacerbate this shortage and harm any American who has a legitimate medical need for these drugs.”
During the pandemic, the federal government expanded telemedicine rules to allow practitioners to prescribe controlled substances to patients virtually. Supporters say this flexibility allows patients to continue receiving care in situations where face-to-face contact poses a risk of exposure to COVID-19. However, it has also raised concerns that web-based platforms allow easy access to potentially addictive drugs.
In some cases, medical providers paid by Done made diagnoses and prescribed medications based on short video or phone conversations and using “limited patient intake documentation,” prosecutors said. Other times, they prescribed medications without having a video or phone call with the patient, according to the indictment.
Prosecutors also accused the company of enacting an “auto-refill” policy that prevented health care providers from following up with patients. The indictment alleges that they paid medical professionals based only on the number of patients they prescribed each month and refused to reimburse them for follow-up services or other medical services they provided after an initial consultation.
The company also allegedly collected individuals’ insurance information and submitted it to pharmacies that dispensed prescriptions, causing the pharmacies to file “fraudulent claims” with insurance companies. Medicare, Medicaid and commercial insurance companies ultimately paid out about $14 million, prosecutors wrote in the indictment.
Officials said Done knew some patients had overdosed and died from drugs prescribed by his service. Done members described the company as a “straightforward drug mill” and “a drug push scam promoting ADHD medications and making large amounts of money,” according to the indictment.
In May 2022, mental health startup Cerebral received a grand jury subpoena indicating that the company was under investigation, and he and Brody allegedly became concerned that they might be the target of a similar investigation. Prosecutors said they destroyed and concealed records and documents that could be used by federal law enforcement investigators and began using an encrypted messaging platform instead of company emails.
Records show he and Brody are in custody and are expected to appear in court Thursday. If convicted, they could face up to 20 years in prison.
The CDC recommends that patients who use telehealth services and currently have an underfilled prescription make an appointment with their health care provider as soon as possible.
