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Beloved Fairfax doctor sentenced in scar cream scam

A Virginia OB/GYN admitted to prescribing expensive scar cream in exchange for kickbacks. (Gerald Martineau/The Washington Post)
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An earlier version of this article inaccurately described the amount of money Leonard Rosen’s defense attorney said his client saved insurance companies through advances in robotics. Stuart Sears said that Rosen “probably saved insurance companies millions of dollars,” not “hundreds of millions of dollars.” This version has been corrected.

Leonard Rosen was an institution in Northern Virginia, delivering more than 10,000 babies in the course of a four-decade career and offering guidance to thousands of women. He did humanitarian work in Bolivia; he helped develop less-invasive and more-affordable treatments; he offered no-cost treatment to women who could not afford care.

But last year, he abruptly retired and closed his practice — a few months before admitting in federal court in Alexandria that he had participated in a fraud scheme by prescribing expensive scar creams in exchange for kickbacks.

He made about $100,000 in bribes. Rosen also billed some patients as an out-of-network provider when he was actually in their insurance network, making about $52,839. He lost his ability to practice medicine and agreed to pay $1.3 million in restitution for the money overpaid by insurance companies.

In court Friday, Rosen, 72, called the crime “a significant lack of judgment” and apologized to his family, friends and patients. He was sentenced to two years of probation, with six months of at-home confinement.

“It’s a sad case, because Dr. Rosen by all accounts is a fantastic physician, and he unfortunately got lured into a scheme not of his own making,” defense attorney Stuart Sears said. “Given the potential outcomes, I was pleased with the court’s decision today and that the government ultimately agreed that incarceration was not appropriate.”

Sears said in court that Rosen has “probably saved insurance companies millions of dollars with the advances he’s made in robotics.” He said Rosen avoided prescribing opioids and switched to pain creams because of his concerns about addiction and abuse.

“Many times I observed him provide free health care to women who had either no health insurance or financial means to pay for the visit or treatment that they needed,” a former nurse at the practice wrote.

Rosen was a small player in a wide-ranging, $8 million conspiracy based around doctors prescribing expensive drugs through pharmacists who paid bribes for getting to fill the orders.

Fairfax doctor admits complicity in $1.8 million fraud involving scar cream

According to court records, the scheme was initiated by two other doctors, only one of whom has been charged with a crime.

It was a colleague of Rosen’s who approached pharmacist Mohamed Abdalla about taking kickbacks and reaped most of the profit from the scheme, according to the court record. That doctor has not been charged. Rosen said he was initially told that Abdalla was paying him to participate in a “speaker bureau.” He said he quickly learned the truth but continued to take the money. In exchange, he began prescribing scar cream to all of his surgical patients. Before, he had prescribed the cream only to some.

Abdalla, who ran several pharmacies across Northern Virginia, says he first started taking kickbacks at the suggestion of yet another doctor in 2013. That doctor, Arlington orthopedic surgeon Thomas Raley, pleaded guilty to fraud last year and is to be sentenced in June. Raley’s business partner also pleaded guilty, along with a pharmaceutical salesman, another pharmacist and two pharmacy technicians.

“I succumbed to the tremendous pressure and huge expenses of owning and managing a small business, that caused me to fail myself as a professional and a respected member of society in the last years of working as a pharmacist,” Abdalla said at his sentencing. “It was my greed, one of the deadliest sins, that took me down this terrible path.”

Raley took kickbacks from Abdalla and others in exchange for writing prescriptions and using certain medical equipment, according to the court record. He admitted setting up a similar arrangement with pharmacies in Maryland and Las Vegas. He specifically targeted prescriptions for the Defense Department’s Tricare health insurance program, knowing it tended to be the most generous. He would write the prescriptions for compounded medications, which are tailored to the individual patient and thus more expensive than standard drugs.

Others involved also engaged in their own tangential schemes, according to court records. Other employees of Rosen’s practice were prescribing red Alaskan algae powder, an expensive ingredient with unclear benefit, in exchange for kickbacks.

A colleague of Abdalla’s who pleaded guilty said in a filing that his mentor told him that these “business relationships” were a “normal” part of the job. Abdalla’s attorney called the crime “consistent with the all-too-common practice of recruiting pharmacists to pay kickbacks for prescriptions.”

Fraud accounts for somewhere between 3 and 10 percent of annual health-care spending in the United States, according to the National Health Care Anti-Fraud Association, a partnership between law enforcement and insurance companies. A 2019 ProPublica investigation found that health-care fraud is rarely prosecuted when government programs are not involved.