BIRMINGHAM, AL – A leader of a prescription fraud scheme has been sentenced six years in prison for healthcare fraud, HIPAA violations and aggravated identity theft.

Judge C. Lynwood Smith Jr. of the United States Attorney's office of Northern District of Alabama sentenced Isaac Earl Smith, 38, on May 25. Smith pleaded guilty to the charges in November 2009. The judge ordered him to serve three years of supervised release after completing his prison term.

Between September 2008 and April 2009, Smith engaged in a criminal conspiracy to commit healthcare fraud that resulted in HIPAA violations and aggravated identity theft.

During that time, according to court records, Smith and others accessed the personal information of individuals who had Flexible Spending Accounts administered by United Healthcare Inc. and were also covered by a prescription drug plan sponsored by the Federal Employees Health Benefit Plan.

Smith and others used the information to create counterfeit prescriptions that were presented to pharmacies in order to illegally obtain controlled substances. Those drugs were then illegally sold to third parties. By using stolen identities on the prescriptions, Smith caused the federal employee's prescription drug plan to pay for the controlled substances, resulting in a loss to FEHBP of $72,746.

"Not only did the people involved in this scheme illegally obtain and sell prescription drugs, they used stolen identities to cause insurance plans to bear the cost of these drugs, as if they had been issued for a legitimate purpose," Vance said. "This office remains dedicated to prosecuting individuals who illegally distribute prescription drugs, as well as those who cause the fraudulent submission of insurance claims, which result in higher insurance premiums for us all."

"Today's announcement demonstrates the price to be paid by those who engage in fraud and deceit to obtain and distribute prescription drugs," said David W. Bourne, special agent in charge of the Food and Drug Administration's Office of Criminal Investigations. "We commend the United States Attorney's Office and our law enforcement partners for their dedicated and collaborative efforts in pursuing this prosecution," Bourne said.

"When it comes to helping people with their medical needs, the health are industry relies on the integrity of the Postal Service," said Martin Phanco, inspector in charge of the U.S. Postal Inspection Service, Atlanta Division. "When fraudsters undermine that trust, they hurt not only the healthcare industry, but also the people who really do need medical attention. To add insult to injury, this scheme also involved the identities of victims. It is only fitting that for all his efforts, Mr. Smith also received a healthy dose of justice."

Judge Smith also ordered Smith to pay $72,746 in restitution to FEHBP and to forfeit the same amount to the government as proceeds of illegal activity.

The U.S. Postal Inspection Service, the Food and Drug Administration, Office of Criminal Investigations, the U.S. Secret Service, the Office of Personnel Management, and the Montevallo Police Department investigated the case. Assistant U.S. Attorney Lloyd Peeples prosecuted the case.