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Compounding Pharmacy Fraud

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Florida Pharma Whistleblower Case Results in FCA Settlement by Private Equity Firm

Posted  09/27/19
Last week, the government announced that compounding pharmacy Diabetic Care Rx LLC, known as Patient Care America (“PCA”), its executives, and the private equity firm managing the pharmacy Riordan, Lewis & Haden Inc., had agreed to pay over $21 million to settle allegations they violated the False Claims Act (“FCA”) by executing a kickback scheme to generate referrals of TRICARE patients. The allegations...

September 26, 2019

Physician Philippe R. Chain will pay $300,000 to resolve allegations that he caused the submission of false claims to Tricare while working for telemedicine company CallMD. Chain allegedly issued and approved prescriptions for compounded medications, many of which were not medically necessary, without speaking to, examining, or otherwise having a physician-patient relationship with the patients.  USAO CT

September 18, 2019

Florida-based compounding pharmacy Diabetic Care Rx LLC, also known as Patient Care America, together with two of its executives, CEO Patrick Smith and VP of Operations Matthew Smith, and the private equity firm Riordan, Lewis & Haden Inc., will pay $21.36 million to resolve a case brought by two whistleblowers under the False Claims Act alleging that they paid unlawful kickbacks to secure referrals for patients covered by TRICARE, the federal healthcare program that covers military members and their families.  The pharmacy paid patient recruiters to target military members and their families for the prescription of compounded creams and vitamins formulated to ensure the highest possible reimbursement from TRICARE.  The marketers in turn paid doctors who issued the prescriptions, often without seeing or even speaking to the purported patients.  In addition, the pharmacy and marketing company often covered patient copayments through a sham charitable organization affiliated with the marketing company.  Private equity investor RLH was alleged to have known about and agreed to the kickback scheme.  Whistleblowers Marisela Medrano and Ada Lopez were, respectively, the former Director of Marketing and the Reimbursement Services Manager of PCA.  They will receive a yet-to-be-determined share of the U.S. recovery.  DOJ; SD FL

September 5, 2019

In yet another enforcement action relating to a nationwide compounding pharmacy fraud scheme involving OK Compounding, Dr. James Womack of Missouri has agreed to pay $471,221 to resolve his liability under the False Claims Act.  Womack allegedly accepting kickbacks disguised as medical director fees in exchange for prescribing medically unnecessary pain creams.  USAO NDOK

August 2, 2019

A Georgia man accused of masterminding a fraud scheme against TRICARE has been sentenced to 8 years in prison and ordered to pay a combined $8 million in restitution and forfeiture.  Coordinated by Michael Burton, the scheme ran from 2014 to 2015 and involved multiple co-defendants and a Florida-based pharmacy.  Together, their cumulative actions caused TRICARE to spent millions of dollars on medically unnecessary compounded prescription drugs, and earned Burton over $1.4 million in commissions.  USAO NDFL

July 5, 2019

A New York doctor is the latest defendant in a widespread OK Compounding pharmacy fraud scheme to settle with the government.  From 2014 to 2015, Dr. George Lehner allegedly prescribed compounded pain creams for his Medicare patients in exchange for an hourly “medical director fee” by OK Compounding LLC.  To settle the case against him, Lehner will pay about $130,000USAO NDOK

June 12, 2019

Lake Country Pharmacy and Compounding Center in Georgia, along with two of its principals, Chris and Carey Vaughan, have settled allegations filed by a whistleblower under the federal False Claims Act and Georgia False Medicaid Claims Act.  According to former pharmacist Chris Coleman, Lake Country submitted bills to Medicare, Medicaid, and TRICARE for compounded medications that were made from non-reimbursable bulk powders but billed as if they were made from reimbursable tablets.  Without admitting or denying these charges, Lake Country agreed to pay $365,000 and enter into an Integrity Agreement with the Department of Health and Human Services.  USAO MDGA

May 29, 2019

A doctor in South Carolina has agreed to pay $92,506.30 to settle allegations of accepting illegal payments from OK Compounding, LLC, in exchange for prescribing their pain creams to TRICARE patients.  The False Claims Act violations allegedly occurred between February and May 2013, and involved “medical director fees” paid to Dr. Jerry Back that were in reality, kickbacks.  This was the eighth kickback settlement in the Northern District of Oklahoma since the beginning of the year.  USAO NDOK

March 26, 2019

The owner and managing member of a Mississippi-based pharmacy has plead guilty to one count of conspiracy to commit health care fraud and one count of conspiracy to commit money laundering and tax evasion in connection with a massive $200 million compounding pharmacy scheme involving at least 12 individuals over four years. Glenn Doyle Beach, Jr. of Advantage Pharmacy admitted to marketing and formulating compounded medications for TRICARE patients without regard to medical necessity, falsifying paperwork to mislead auditors, and engaging in money laundering and tax evasion to conceal proceeds. He is scheduled to be sentenced in July. DOJ; USAO SDMS

February 27, 2019

The owner and operator of a drug marketing company has pleaded guilty for his role in a $200 million scheme to defraud TRICARE in one of the largest healthcare fraud cases said to come out of Mississippi. Between 2012 and 2016, Howard Randall Thomley of Advantage Marketing Professionals allegedly recruited TRICARE beneficiaries to accept millions of dollars of medically unnecessary compounded medications by paying them a percentage of prescription revenues. The prescriptions forms — signed by medical professionals who never saw the recruited beneficiaries — were then filled by a compounding pharmacy, Advantage Pharmacy, who paid Thomley a portion of the reimbursements. For his role in the scheme, Thomley now faces a maximum sentence of 10 years in federal prison at his sentencing in July. USAO SDMS
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