Done CEO, president arrested, charged with $100M fraud on Adderall distribution in first Federal case on telemedicine prescribing (updated)

Done effectively done at the C-level, but not done in business yet. Last Thursday, Ruthia He, the founder/CEO, and David Brody, listed as the clinical president of Done Global (Done), were arrested in California on a Federal indictment filed in the US District Court for the Northern District of California. They are charged with providing easy online teleprescription access to Adderall and other Schedule II stimulants through patients paying a monthly subscription fee and skirted the normal restrictions provided in the Controlled Substances Act (CSA) and other regulations. By providing easy access and raising subscription fees, He and Brody are charged with generating over $100 million in revenue by arranging for the prescription of over 40 million pills from 2020 into 2023, during the pandemic when the Ryan Haight requirements were temporarily suspended by the DEA. 

Given the multiple counts of conspiracy to distribute controlled substances and distribution of controlled substances, the charges may earn them a maximum 20 years in Federal prison. One would also expect a clawback of payments made by subscribers, health plans, and Federal programs. The latter two, according to the DOJ release, amount to $14 million alone.

The Done indictment is the first Federal prosecution of criminal drug distribution related to telemedicine prescribing by a digital health company. In the 2020-2023 period, Done was a seed stage company, cited in the indictment as misrepresenting its size. Its current backers are Craft Ventures, F7 Ventures, and Offline Ventures but no additional rounds are listed on Crunchbase or other sources. He was a former product designer at Facebook and she was involved as an investor in or founder of various startups before Done according to her LinkedIn profile. David Brody, MD, is a psychiatrist listed as the chief medical officer of Connectix Health and as a self-employed consultant in Collaboration Care, with no reference to a position at Done. 

According to the Department of Justice release, He and Brody:

  • Targeted drug-seeking users through social media buys in the tens of millions of dollars.
  • Intentionally structured the Done platform to facilitate access to Adderall and other stimulants. This is evident from their current website which emphasizes ADHD. 
  • Instructed Done prescribers to prescribe Adderall and other stimulants even if the Done member did not qualify or they were not medically necessary. They also mandated that initial encounters would be under 30 minutes. 
  • He put into place a monthly auto-refill function for subscribers without further check-ins.
  • Discouraged Done prescribers from follow-up care. The compensation structure for prescribers solely paid on the number of patients receiving prescriptions–not for medical visits, telemedicine consults, or time spent after the initial consult.  
  • Conspired to defraud pharmacies, Medicare, Medicaid, and commercial insurers by dispensing Adderall and other stimulants to Done members, who also continued to pay subscription fees.

Further, “He and Brody allegedly persisted in the conspiracy even after being made aware that material was posted on online social networks about how to use Done to obtain easy access to Adderall and other stimulants, and that Done members had overdosed and died.” 

Done was singled out in June of 2022 when Cerebral was facing Federal investigation and a grand jury subpoena, actions that continue today but haven’t proceeded to an indictment. At that time, Truepill (also under DEA scrutiny on Schedule II, TTA 22 Dec 2022), CVS, and Walmart Health refused to fill prescriptions by both Cerebral and Done. With Cerebral facing investigation, Done wasn’t far behind. By September 2022, according to The Wall Street Journal, Done was being investigated by the Drug Enforcement Agency (DEA). The Verge

He and Brody are charged with reacting to that investigation by obstructing justice: deleting documents and other communications, encrypting their messages versus using company email, and failing to produce documents to a Federal grand jury.

Despite Cerebral’s far higher profile and volume, even with an ongoing investigation not only on prescribing but also on ad trackers [TTA 9 Feb 2023], the prosecution of Done’s head executives on criminal drug distribution charges is the first brought by the Justice Department against a digital health company for violations related to the CSA and drug prescribing regulations plus fraud.

In this Editor’s view, the relaxation of teleprescribing Schedule II drugs for three years invited abuse. Done may be the first, but it won’t be the last. See the prediction 8 July 2022 made by a former state ADA that both the Feds and states won’t stop at prescribing but will go on to telehealth billing (scroll to last item).

Done has not made any statements directly to press to date, save a short statement on their website:

Done Global strongly disagrees with the criminal charges filed last week against our founder, Ruthia He, and Dr. David Brody, which are based on events that principally occurred between February 2020 and January 2023. Since our founding, Done Global has worked to make mental health care accessible for tens of thousands of Americans trapped in a spiraling national crisis. Done Global will continue to operate – and do everything in our power to ensure that tens of thousands Americans that rely on us do not lose access to their mental health care. At the same time, we will continue to support our clinicians as they exercise independent clinical judgment, practice evidence-based medicine, and provide best-in-class health care.

Update: This statement has been expanded since our original article. Notably, the company declares that “Done is fully aligned with the Drug Enforcement Administration and the Department of Justice on eliminating drug abuse in America” and that they have protocols in place to prevent abuse. Done is also committed to continuing normal operations. Full text is here. David Brody is still listed as clinical president on the medical team page. Ruthia He is not listed on the website at all nor are other company leaders. Press releases posted on the site end in 2022.

Mobihealthnews and Fierce Healthcare essentially recap the DOJ release. The Verge includes the text of the 22-page indictment at the end of their article. 

Editor’s Note: On 30 May, TTA included a Perspectives article on collaborative care authored by Sussan Nwogwugwu, DNP, PMHNP, Clinical Leader at Done. This contributed article was non-promotional and primarily about alleviating clinician burnout. It briefly mentions technology in telehealth with one mention of ADHD as an example.

News roundup: DDoS attacks may be ‘smokescreen’, DEA slams Truepill with ‘show cause’, telehealth claims stabilize at 5.4%, Epic squashes patent troll, Cerner meeting exits KC, MedOrbis, Kahun partner on AI intake

Readers won’t get out of 2022 without one last cybercrime…article. DDoS attacks–distributed denial of service–escalated worldwide with Russia’s invasion of Ukraine in February. (Ukraine and military aid is a hot topic this week with President Zelenskyy’s visit to the US and Congress speech.) Xavier Bellekens, CEO of Lupovis, a cybersecurity company and a cyberpsychologist (!), postulates that DDoS attacks, as nasty as they are, may be a smokescreen for far more nefarious and damaging attacks. While IT goes into crisis mode over the DDoS, other attacks and information gathering on systems preparing for future attacks are taking place. Russian cyber groups focus on large organizations and move down the line into the most vulnerable, using both manual and automated approaches. Worth reading given the vulnerability and IT short staffing in healthcare organizations. Cybernews

The fallout from Cerebral and Schedule 2 telehealth misprescribing expands. The Drug Enforcement Agency (DEA) issued a ‘Show Cause’ to online pharmacy Truepill for inappropriate filling of ADHD Schedule 2 medications, including Adderall. A ‘Show Cause’ order is an administrative action to determine whether a DEA Certificate of Registration should be revoked, which could put Truepill out of business. The red flag for the DEA: 60% of  Truepill’s prescriptions–72,000–filled between September 2020 and September 2022 were for controlled substances, including generic Adderall. Truepill was Cerebral’s primary mail order provider, though they also used CVS and Walmart. The company stopped filling Cerebral’s ADHD prescriptions in May 2022.

In the order, the DEA cites that “Truepill dispensed controlled substances pursuant to prescriptions that were not issued for a legitimate medical purpose in the usual course of professional practice. An investigation into Truepill’s operations revealed that the pharmacy filled prescriptions that were: unlawful by exceeding the 90-day supply limits; and/or written by prescribers who did not possess the proper state licensing.”

The company stated in an emailed statement that they were fully cooperating with the investigation. If it does move to a hearing, Truepill’s chances of a successful defense are statistically low.

Truepill also fills prescriptions for Hims & Hers, GoodRx and Mark Cuban Cost Plus Drug Company. It was valued in its 2021 funding round at $1.6 billion. Companies in telemental health and prescribing of Schedule 2 ADHD medications, such as Cerebral and Done Health, are under enhanced scrutiny over their business practices [TTA 1 June]. Mobihealthnews, DEA press release, HISTalk, Digital Health Business & Technology

Telehealth medical claims stabilize. FAIR Health’s latest reports for August and September report that the percent of medical claims coded as telehealth are back up to 5.4%. June and July dropped slightly to 5.2% and 5.3% respectively. Also steady are that the vast majority of claims are for mental health services. In September, they were 66% of diagnoses far ahead of ‘acute respiratory diseases and infections’ at 3.1%. In procedure codes, psychotherapy accounts for over 43%.

A patent troll Epically bites the dust. Back in the early to mid-2010s [TTA’s index here], patent trolls (technically non-practicing entities which have no active business) presented a significant threat to early and growth-stage health tech companies. One, MMR Global (which apparently no longer exists), was notorious for buying up EHR and PHR-related patents and then filing patent infringement lawsuits against both small and large healthcare organizations with similar patents–and their users–that were generally monetarily settled. But NPEs are still active. One in south Florida, Decapolis Systems, used the same techniques as MMR Global had, suing in this case multiple Epic customers for patent infringement. Epic not only defended its customers but also sued Decapolis in the US District Court, Southern District of Florida. The court found that both Decapolis patents were invalid, ending what Epic termed ‘vexatious patent litigation’. Decapolis had successfully sued 24 other entities, including other EHRs, which settled. Owned by an inventor, this company will have to find another line of honest business. Epic release, Thomson Coburg

Oracle’s message to Kansas City: no more Cerner meetings for you. And maybe more. Cerner’s site for its annual customer/partner conference since 2007 has been in Kansas City, attracting about 14,000 visitors. Not only will it be integrated into Oracle CloudWorld in Las Vegas, 18-21 September, it’s been retitled Oracle Health with no mention of Cerner. The loss to local KC business is substantial–estimated to be in the $18 million range. While it’s logical to integrate it into the massive CloudWorld conference, it’s also another message to KC after Oracle’s sudden real estate downsizing that Cerner’s presence there will shrink…and shrink..as it’s absorbed into Oracle Health, and further confirmation that the Cerner name is gradually being sunsetted. KansasCity.com, HISTalk

A new (to this Editor) specialty care telehealth company, MediOrbis, is partnering with Kahun for an AI-enabled digital intake tool. This is a chatbot capable of conducting an initial medical assessment. Based on the patient’s answers and Kahun’s database of about 30 million evidence-based medical knowledge insights, it provides a summary for the physician before the telehealth visit and highlights areas of concern. Mobihealthnews  MediOrbis also has partnered with remote care/engagement Independa to add its capabilities to Independa’s HealthHub on their LG TVs.

Weekend news roundup: Teladoc adds to Primary360; Novartis, Medtronic support UK digital cardiac startups; Bluestream adds PrimaryOne Health; NoKo ransomware threatens healthcare; more Fed scrutiny on telehealth Rx, billed time may be coming

Teladoc had some positive news this week with additions to Primary360, its new primary care service for the provider/payer market. It added in-network referrals and care coordination capabilities, free, same-day prescription delivery from Capsule, and in-home, on-demand phlebotomy from Scarlet Health. The release notes that about half of patients fail to pick up their prescriptions. In addition, Priority Health, a nonprofit health benefits company serving Michigan, has added Primary360 to its fully insured virtual first plan design for employers. FierceHealthcare

Some good news from the UK in a time of government upheaval. Novartis is supporting cardiac digital health startups through the Novartis Biome UK Heart Health Catalyst 2022. This investor partnership is to identify and scale innovations for non-invasive lipid testing and at-home blood pressure testing using software as a medical device. Partners in support are Medtronic, RYSE Asset Management and Chelsea and Westminster Hospital NHS Foundation Trust and its official charity CW+. Successful applicants will receive support from partners during the competition process, the opportunity of investment up to £3 million provided by RYSE Asset Management, subject to due diligence at RYSE`s discretion, access to the Novartis Biome UK eco-system located in White City, and opportunities to work with our NHS partners to set up and deliver a pilot evaluation of the winning innovation. Applications must be in by 31 August–form is here. FierceBiotech

Bluestream Health adds PrimaryOne Health. Bluestream provides a white-labeled customized virtual care service that will be integrated into PrimaryOne’s services. This medical group of 11 community healthcare facilities across central Ohio serves 48,000 patients with primary care, OB-GYN, pediatric, vision, dental, behavioral health, nutrition, pharmacy, physical therapy, and specialty care.  Release

North Korea’s Maui Ransomware is no Hawaiian vacation. The threat has built enough since May 2021 for the Federal Bureau of Investigation (FBI), Cybersecurity and Infrastructure Security Agency (CISA), and the Department of the Treasury (Treasury) to release a joint Cybersecurity Advisory (CSA) on Thursday warning healthcare and public sector health organizations. It is state-sponsored North Korean malicious cyber activity. The CSA provides a sample of how it executes, what it targets, how it encrypts files, and how to respond. Hackermania, NoKo Style, is Running Wild with breaches piling up [TTA 7 July], and not only in healthcare. Healthcare Dive, Healthcare IT News

And in Dog Bites Man News, a former US assistant district attorney for Massachusetts predicts that Federal entities such as the Department of Justice (DOJ) may not stop with telemental prescribing. They will not only be ramping up their scrutiny of telemental health companies–but also telehealth billing. For Cerebral and Done Health that facilitate the prescribing of Schedule 2 drugs, this assumption of scrutiny has become a no-brainer. What it also is: a caution for mainstream telehealth providers such as Teladoc and Amwell charging into psychiatric telehealth.  But the former ADA, Miranda Hooker, now a health sciences area partner with Troutman Pepper in Boston, makes a broader prediction. Prosecuted telehealth fraud, as this Editor has noted, has grown in other areas, such as prescriptions for durable medical equipment (DME) billed to Medicare [TTA 6 May] and cardiologists moonlighting as Dr. Mabuse, Master Cybercriminal [TTA 19 May]. But the next frontier may be time-specified telehealth consults billed to Medicare under various CPT codes (e.g. 994XX). A 15-minute consult billed as a more lucrative 30-minute consult can be considered fraud. The Cerebral investigation, according to Hooker, marks a shift by the DOJ into investigating the actual provision of telehealth services and whether they are being billed properly. FierceHealthcare

CVS, Walmart refuse Cerebral, Done Health controlled substance prescriptions via telehealth; Cerebral CEO replaced

More hot water dumped by CVS Health and Walmart on Cerebral, Done Health. The two retail giants announced last week that they would refuse to fill prescriptions of all controlled substances by telemental health providers Cerebral and Done Health. Cerebral was already under investigation by DOJ on over-prescribing of controlled substances by its provider network as a business practice, including advertising [TTA 10 May]. It turns out that seed-stage Done Health, a telemental provider specializing in ADHD diagnosis and support, is also facing the same scrutiny and treatment. 

Cerebral had already restricted prescribing controlled substance prescriptions for new ADHD patients as of 9 May. They initially continued to prescribe controlled substances for new patients diagnosed with other mental health conditions, according to a memo from their chief medical officer to their clinician network, but stopped that on 20 May with an exception for opioid use disorder. Truepill, Cerebral’s recommended mail order pharmacy, had stopped filling all Cerebral Schedule 2 prescriptions prior to that date. The CVS and Walmart refusals close off two more pharmacies for patients. FierceHealthcare

Earlier in the month, Cerebral CEO and co-founder Kyle Robertson was forced out by the Cerebral board. His replacement by medical officer and president Dave Mou, MD is effective immediately. According to reports, Robertson is fighting their action, calling it illegal and accusing the board of making him the scapegoat for the company’s problems. FierceHealthcare

Companies like Cerebral and Done grew quickly in 2020-21 due to the pandemic-driven loosening of psychiatric patient evaluations, eliminating the usual initial in-person initial visit and permitting online treatment. Restrictions were also loosened for diagnoses permitting the prescription of Schedule 2 drugs (those judged to have potential for abuse) with solely a video visit and follow up. With fast growth came more need to maintain that growth, according to current and former employees.  

Upon taking the CEO position, in an email to the prescriber team, Dr. Mou announced that patients on controlled substances would be transitioned as follows: a visit prior to 1 August to establish a treatment plan to transition to a non-controlled medication, titrating off of their controlled substance, or transferring their care to a local provider by 15 October. With the pandemic policies around telehealth ending soon, this is called playing defense, though it well may stop growth. Wall Street Journal, The Verge