DOJ Charges California Physician with COVID-19 Fraud

April 21, 2020 | Marc S. Ullman | COVID-19 | FDA | Fraud and Abuse | Litigation | Pharmaceuticals

On April 16, the United States Attorney’s Office for the Southern District of California charged Dr. Jennings Ryan Staley, a licensed physician and the operator of Skinny Beach Med Spa in San Diego, with mail fraud in connection with his offer to sell “COVID-19 treatment packs” to patients and the general public. Emails sent by Dr. Staley and his spa described this as a “concierge medicine experience” priced at $3,995 for a family of four, which included among other things access to Dr. Staley, the medications hydroxychloroquine and azithromycin, and “anti-anxiety treatments to help you avoid panic if needed and help you sleep.”

After the scheme was initially reported to the FBI, federal agents participated in a recorded conversation with Dr. Staley in which he described his treatment regime as “an amazing cure” and a “miracle cure” that would cure COVID-19 “100%.” He also claimed that if one takes the medication without having the disease, “you’re immune for at least 6 weeks” and referred to his program as  a “magic bullet.” He also stated, “It’s preventative and curative. It’s hard to believe, it’s almost too good to be true. But it’s a remarkable clinical phenomenon.” The federal government also alleges that Staley stated, “I’ve never seen anything like this in medicine, just so you know. Really, I can’t think of anything. That, you’ve got a disease that literally disappears in hours.”

The Complaint also charges that Dr. Staley offered the undercover federal agent Xanax (alprazolam) – a Schedule IV controlled substance – as part of his concierge package, and shipped the drug without conducting any sort of medical examination. Dr. Staley allegedly claimed that his customs broker was smuggling hydroxychloroquine from China to make his own pills, and had concealed the shipment from customs authorities by describing it as sweet potato extract. According to the government, shipping records confirmed that Dr. Staley was indeed importing a shipment of “yam extract,” scheduled to arrive in the U.S. in a matter of days after its contact with him.

The investigation into Dr. Staley’s conduct was a joint effort between the Department of Justice/U.S. Attorney’s Office, the FBI, and the Food and Drug Administration’s Office of Criminal Investigation. In announcing the indictment, Omer Meisel, the Acting Special Agent in Charge of the FBI’s San Diego Field Office, stated: “The sale of false cures, especially by a medical professional, will be vigorously investigated by the FBI. The FBI is using a variety of tools to identify anyone who exploits the current crisis with fraudulent scams or a variety of cyber schemes – and is proactively warning the public about products claiming to save lives, before losing their money or creating false hope. Scammers seeking to profit by exploiting fear and uncertainty during this COVID-19 pandemic will be brought to justice.”

This case should provide ample notice to licensed healthcare practitioners, including MDs, that if they offer bogus “cures” or treatments for COVID-19 to desperate people during the current crisis, their license will not shield them from potential prosecution.

In New York State, incidents of this type of conduct can be reported to the State Department of Health. The FBI has also posted a detailed warning for consumers to be alert for fraudulent COVID-19-related schemes and where they can be reported.

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