Compounded medication cases continue to be filed by federal and state prosecutors. A case filed two weeks ago in San Diego (a military town) involves recruiting active military duty patients, a Utah pharmacy that shipped compounded medications, and a medical clinic in Tennessee who had doctors prescribe the medications based on telemedicine exams that did not meet TRICARE rules.
The billing at issue here is solely TRICARE, a government health care program that covers United States service members, retirees, and their dependents. It is not clear if there was also billing to third party insurance.
On or about January 26, 2018, Jimmy Collins and Ashley Collins, a married couple living in Tennessee were Indicted and arraigned in San Diego federal court that they illegally billed TRICARE more than $65 million in pharmacy reimbursement funds.
Compounding Pharmacy. The pharmacy formerly known as The Medicine Shoppe, a franchise opened by a noted compound pharmacist in 1993, was sold in 2014 to two people, who are identified in court documents only by the initials T.S. and W.W. When the new owners took over, claims to TRICARE for compounded drugs skyrocketed, according to the search warrant affidavit written by a special agent for the Defense Criminal Investigative Service.
For example, in 2013, the pharmacy filled 218 compounded prescriptions for TRICARE patients. The number of such prescriptions grew to 541 in 2014 and, in just the first four months or so of 2015, the number soared to 4,637 prescriptions, eliciting $67.3 million in reimbursement claims, according to a search warrant affidavit. The pharmacy, in the town just north of Salt Lake City, had a license to ship medications to California, according to the Indictment.
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 are 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 or application or is allergic to a dye or other ingredient.
Marketers/Recruiters. According
to the indictment, between October 2014 and July 2015, Jimmy and Ashley Collins
operated a network of recruiters or marketers working to sign up TRICARE beneficiaries to
obtain compounded medication from The Medicine Shoppes. The Indictment alleges that to induce TRICARE beneficiaries to sign up to receive these compounded medications, recruiters working for the Collinses were told to inform potential beneficiaries that they would be paid to evaluate the medications as part of an ongoing medical study. The government contends that in reality, no real study was taking place.
Alleged Sham Medical Study and Improper TRICARE Billing for Telemedicine. Investigators say the specialized drugs went to a network of Southern California Marines who were recruited by fellow Marines to participate in a medical study. The Marines were paid $100 to $300 a month to talk to the doctors over the phone in a telemedicine exam, the affidavit states. TRICARE allows telemedicine consultations that can be billed, but they must be held in places such as a doctor’s office, not at home [except in very limited unusual circumstances].
The Medical Clinic Doctors. Once
a recruiter convinced a TRICARE beneficiary to sign up to receive the
compounded medications, the patient's information was allegedly sent to Choice
MD, a Tennessee medical clinic co-owned and operated by the Collinses.
Doctors employed by the Collinses at Choice MD then wrote prescriptions for the
TRICARE beneficiaries even though they never examined the patients in person.
The vast majority of the prescriptions were authorized by emergency room physicians who served as medical directors for Choice MD, a medical practice in Cleveland, Tenn., owned by Jimmy and Ashley Collins, the court documents allege. The practice offers everything from primary care to therapeutic massage to Botox, according to its website. The physicians are not named and only referred to by their initials, S.V. and C.L. One of the doctors also signed off on prescriptions written by a nurse practitioner, the government documents allege.
Prescriptions Not Given to Patients. Once the prescriptions were signed by the doctors, these prescriptions were not given to the patients but sent directly to The Medicine Shoppe or related pharmacies which filled the prescriptions and billed TRICARE at high above the market prices. This allegation is used to show that there was a kickback arrangements since the patient is not picking the pharmacy. The government alleges that these medications cost an average of more than $14,500 per medication per month.
High Billing for Short Time Period. Between
December 2014 and May 9, 2015 – the day that TRICARE stopped reimbursing for
compounded medications – doctors working for the Collinses authorized 4,442
prescriptions that were filled at The Medicine Shoppe. The Medicine
Shoppe billed TRICARE $65,679,512 for these prescriptions.
Payments by Pharmacy to Collinses. The
owners of The Medicine Shoppe then allegedly paid the Collinses based on the
number of prescriptions referred by the Collinses recruiter network. It is not clear if this was a billing, management or services arrangement or if the parties had some agreement justifying the payments. Between February and July 2015, the Indictment alleges The Medicine Shoppe payments to the Collinses totaled at least $45.7 million dollars. The government calls these payments "kickbacks."
Payments to Recruiters. The Collinses, in turn, paid the recruiters working as part of their network. Six of
these marketer payments, including one for more than $1.4 million, form the
basis for the six counts of Payment of Illegal Remuneration brought against
Jimmy and Ashley Collins in the indictment.
Forfeiture Allegations. The Indictment also includes a lengthy list of forfeitable funds, property, and
items purchased by the Collinses with the proceeds of the business.
Included among these items is an eye-catching 82-foot yacht, multiple luxury vehicles
(including two Aston-Martins), dozens of pieces of farm equipment and
tractor-trailer trucks, and three pieces of Tennessee real estate.
Attorney Commentary: Government insurance billing has so many rules and regulations that the marketing, recruiting military, use of telemedicine in another state, the high billings for these medications, and any contracts between the parties should have been reviewed by compliance counsel. Perhaps the parties here relied on counsel or compliance and if so, that's a good faith defense to these type of charges.
Due to the use of big data, this case came to a halt much sooner than would have happened in earlier days. It appears the government gave a prepayment limitation or some other administrative action that prevented billing after 6 months.
Posted by Tracy Green, Esq.
Green and Associates
