April 24, 2017
Contact: SA Debbie Webber
Phone Number: (504) 840-1100
Workers Comp Manager Sentenced In High Profile Pill Mill Case
Christopher Manfuso Paid More Than $2.6 Million in Kickbacks
MOBILE, Ala. - A former worker’s compensation manager, Christopher Manfuso, has been sentenced to six months of house arrest and ordered to immediately pay a $50,000 fine, for his role in the operation of the massive pill mill run by Dr. Xiulu Ruan and Dr. John Patrick Couch, announced DEA Assistant Special Agent-in-Charge Bret Hamilton and Acting United States Attorney Steve Butler of the Southern District of Alabama.
In October 2015, Christopher Manfuso of Fulton, Maryland pled guilty to paying over $2.6 million in illegal kickbacks to Dr. Xiulu Ruan. The kickbacks were associated with a workers compensation dispensary within Physicians Pain Specialists of Alabama -the clinic owned by Dr. Ruan and Dr. Couch - which was managed by a company that employed Manfuso, and later by a company he owned.
At trial, Manfuso testified that he worked for Industrial Pharmaceuticals (“IPM”) in 2011 when IPM contracted with Dr. Ruan and Dr. Couch to manage a workers compensation dispensary within PPSA. The contract was structured whereby IPM purchased the drugs for the dispensary upfront, deducted the cost from the amount collected in reimbursement, and then paid the doctors. Manfuso testified that with most other doctors across the country, IPM paid a percentage of the reimbursement collected minus cost. However, Dr. Ruan negotiated for guaranteed monthly minimum payments for himself and Dr. Couch. Thus, Dr. Ruan and Dr. Couch made at least the minimum guarantee each month, even if the collected reimbursement minus the cost would not warrant that amount.
Manfuso testified that the monthly guarantees began at $45,000.00 and $15,000.00 a month for Dr. Ruan and Dr. Couch, respectively. However, over the five-year period these illegal kickbacks were paid, Dr. Ruan’s guaranteed monthly minimum payment increased all the way to $80,000.00 per month. Evidence at trial also showed these guaranteed monthly payments to the doctors did not go into the general PPSA business accounts. Rather, the checks were mailed to the doctors’ homes and were deposited in their personal bank accounts.
When asked to describe the difference between a pharmacy and a workers compensation dispensary, Manfuso testified that a dispensary can provide the drugs to the patient right there in the doctor’s office. Furthermore, the reimbursement from workers compensation companies was typically significantly higher - sometimes 100% higher - than the reimbursement rate paid by health insurance companies for the exact same drugs filled at a pharmacy. So while Dr. Ruan and Dr. Couch owned their own pharmacy as well, there was a much greater financial incentive to direct all of their workers compensation patients to the dispensary instead.
In light of Manfuso’s substantial cooperation and testimony at trial, the United States requested a sentence 50% below the low end of his advisory sentencing guidelines range. Based on the range determined by the court, the sentencing recommendation was 15 months. However, in light of Manfuso’s cooperation and other factors Judge Granade declined to give Manfuso an in-custody sentence. Rather, he was sentenced to three years of probation, the first six months of which are home confinement, along with a $50,000.00 fine due immediately.
Bret Hamilton, DEA Assistant Special Agent-in-Charge for the State of Alabama, stated, “Mr. Manfuso was more concerned with lining pockets at any means than insuring injured patients received proper medication. His conviction shows that no one in the medical community is immune from prosecutions and they will be held accountable for their misdeeds.”
Acting U.S. Attorney Steve Butler stated, “As the seven-week trial of Dr. Ruan and Dr. Couch clearly showed, greed was the motivating factor behind the doctors’ criminal actions. Mr. Manfuso helped feed that greed by paying illegal kickbacks to the doctors in order to secure their dispensing business. Such conduct is criminal and will continue to be prosecuted in this district.”
Robert Laskey, Special Agent-in-Charge of the Federal Bureau of Investigation, Mobile Division, stated, “The FBI will continue to use every resource available to ensure that this behavior will not be tolerated. We will continue to work with our federal, state, and local partners to investigate these crimes of greed.”
This case was jointly investigated by DEA-Mobile and FBI-Mobile.
Parents and children are encouraged to educate themselves about the dangers of drugs by visiting DEA’s interactive websites at www.JustThinkTwice.com, www.GetSmartAboutDrugs.com and www.dea.gov.