Monday, February 10, 2020

Four Indicted in California for Billing Compound Cream Prescriptions to TRICARE and Labor Union Health Plans


The government has been investigating pharmacies that dispense and bill compound creams for the past 5 years as well as the marketing companies that work with them. Much of the focus has been on billings to workers' compensation carriers or billing to TRICARE, military health insurance, and billing to union health plans.

On February 4, 2020, a 48-count grand jury indictment was unsealed naming four  defendants relating to an Orange County compound pharmacy, Professional Compounding Pharmacy (PCP), that allegedly submitted fraudulent bills to the military’s TRICARE health plan and a labor union health plan for medically unnecessary compound cream prescriptions in which there was alleged illegal marketing. An indictment is not evidence and all defendants are presumed innocent until and unless proven guilty beyond a reasonable doubt. 

The indictment – which contains charges of health care fraud, mail fraud, illegal kickbacks and money laundering – alleges that PCP, its marketers and a physician fraudulently generated prescriptions for custom-made compound cream medications. The indictment alleges that some bills charged as $15,000 per tube.

The indictment alleges that two “pain clinics” in Lawndale and National City recruited beneficiaries of TRICARE and the International Longshore and Warehouse Union’s (ILWU) Pacific Maritime Association Welfare Plan. 

The defendants allegedly paid beneficiaries $200 each to receive treatment by doctors who supposedly were conducting “pain studies” to evaluate the effectiveness of the compound pain creams. The four defendants named in the indictment are:

James Nate Bell, the owner of PCP and two medical marketing companies that were allegedly used to funnel kickbacks to PCP marketers;

Regina Piehl who was affiliated with several companies that allegedly received and paid kickbacks to refer and obtain prescriptions for PCP;

Dr. Michael Edwards, a physician who allegedly worked with Piehl to set up clinics to study the efficacy of compound creams, but which the government alleges were "prescription mills" that generated profits for PCP and its marketers; and

Sara Samhat who allegedly worked with Dr. Edwards to route prescriptions to PCP and other companies involved in the arrangement in exchange for receipt of kickbacks from the referral of the prescriptions.

PCP, which operated in La Habra and Brea, allegedly used a network of marketers and one principal doctor to locate beneficiaries of the TRICARE and ILWU plans. PCP and its marketers also enlisted the participation of other doctors and a nurse practitioner to write prescriptions for pain-relief creams, and PCP ultimately filled prescriptions – including refills – that were allegedly not medically necessary.

The participants allegedly provided the $200 payments to the “patients” for agreeing to show up at the clinics for the "pain studies" which are alleged to be fake. They also allegedly paid kickbacks to medical marketers and professionals in exchange for generating a large volume of compound prescriptions. 

PCP allegedly paid marketers approximately 50 percent of the payments it received from TRICARE and ILWU Plan manager to provide the marketers with ongoing incentives to find doctors and patients willing to write or accept the compound cream prescriptions which were also allegedly medically unnecessary.  Health care professionals work at these “pain clinics” were allegedly encouraged to write prescriptions for medically unnecessary compounded creams.  
          
The indictment alleges that the alleged illegal business peaked in the first half 2015 and continued into 2016 and then dropped when the reimbursement rates for compounded creams were lowered.

The alleged losses are high as the indictment alleges that TRICARE sustained losses of approximately $19 million and the ILWU Plan sustained additional losses of approximately $3 million. 

As part of the indictment, federal agents obtained warrants to seize a Cadillac Escalade and two of Bell’s brokerage accounts.
          

DISCLAIMER

DISCLAIMER: Green & Associates' articles and blog postings are prepared as a service to the public and are not intended to grant rights or impose obligations. Nothing in this website should be construed as legal advice. Green & Associates' articles and blog postings may contain references or links to statutes, regulations, or other policy materials. The information provided is only intended to be a general summary. It is not intended to take the place of either the written law or regulations. We encourage readers to review the specific statutes, regulations, and other interpretive materials for a full and accurate statement of their contents and contact their attorney for legal advice. The primary purpose of this website is not the commercial advertisement or promotion of a commercial product or service and this website is not an advertisement or solicitation. Anyone viewing this web site in a state where the web site fails to comply with all laws and ethical rules of that state, should disregard this web site.

The information provided on this website is for informational purposes only. It is not intended to create, and does not create, a lawyer-client relationship with Green & Associates, Attorneys at Law. Sending an e-mail to Tracy Green does not contractually obligate them to represent you as your lawyer, or create any type of client relationship. No attorney-client relationship will be formed absent a written engagement or retainer letter agreement signed by both Green & Associates and client and which specifies the scope of the engagement.

Please note that e-mail transmission is not secure unless it is encrypted. E-mail messages sent to Ms. Green should not include confidential or sensitive information.