Two Physicians Sentenced In Sixty-Five Million Dollar TRICARE Fraud Scheme Involving Compounded Medications

On September 9, 2020, the Justice Department (DOJ) announced a 77-year old and 65-year old were sentenced to 28-months and 24-months, respectively, for their part in a compounded medication scheme that cost the TRICARE program $65 million in actual losses.

Compounded medications are specialty medications mixed by a pharmacist to meet the specific medical needs of an individual patient. Although compounded drugs are not approved by the Food and Drug Administration (FDA), they can be properly prescribed when a physician determines that an FDA-approved medication does not meet the health needs of a particular patient, such as if a patient requires a particular dosage, route of administration, or is allergic to a dye or other ingredient contained in the commercially available drug.

According to the sentencing memorandum, as part of this conspiracy a team of individuals worked to recruit and pay military members and their dependents – all TRICARE beneficiaries – to obtain compounded medications that would be paid for by TRICARE. This information was sent to the medical clinic that employed the physicians. The two physicians then wrote prescriptions for the TRICARE beneficiaries, despite never examining the patients. Once signed by the doctors, these prescriptions were not given to the patients, but sent directly to particular pharmacies controlled by co-conspirators, which filled the prescriptions and mailed the drugs to the patients.

Between November 2014 and June 2015, the two physicians combined authorized 6,694 prescriptions, for which their co-conspirators billed TRICARE $89,725,000. Of this amount, over $65 million was for prescriptions written for TRICARE beneficiaries.

The facts presented in this case are substantially similar to many compounded medications cases brought by the DOJ. The case and the sentencing of physicians demonstrates that the DOJ continues to prosecute events that occurred during the height of the compounded medication era (2012-2015), it also demonstrates that the federal courts are not shy about sending physicians to prison who write dubious prescriptions.

How Frier Levitt Can Help

Pharmacies, physicians, marketing companies, and telemedicine companies need to have qualified healthcare counsel evaluate any arrangement involving the flow of remuneration and referrals among participants in any proposed arrangement. Moreover, individuals and entities that participated in any arrangement involving compounded medication (or DME products) that targeted federal healthcare beneficiaries, such as Medicare, Medicaid or TRICARE, should have their participation reviewed by counsel for regulatory compliance, potential self-disclosure, and defense preparation, as it is clear the DOJ continues to pursue participants in these arrangements. Contact us to consult with an experienced healthcare attorney.

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