Details emerge in alleged compounding pharmacy scheme

By Lici Beveridge, USA TODAY NETWORK – MISSISSIPPI 

New court documents outline details of an alleged scheme to defraud more than $400 million from public and private health insurance providers nationwide.

Two Hattiesburg residents have emerged as key figures in the alleged scheme, along with two from the Jackson area.  According to the documents, Wade Walters and Hope Thomley, both of Hattiesburg, Mitchell “Chad” Barrett of Clinton and Thomas E. Spell Jr. of Ridgeland “were the central architects of one of the comprehensive health care fraud, kickback and money laundering schemes that threatened the very solvency of some health care benefit programs” between January 2012 and December 2015.

The information comes from an amended complaint by the government seeking millions of dollars from civil forfeiture. It was filed by U.S. Attorney Gregory K. Davis and M. Kendall Day, chief of the U.S. Department of Justice Money Laundering and Asset Recovery Section.

The government claims others participated and benefited from the fraud, among them other Pine Belt residents. The alleged crimes stem from the activities surrounding three primary pharmacies based in Mississippi: World Health Industries (RX Pro Pharmacy) in Jackson; Advantage Medical and Pharmacy in Hattiesburg; and Medworx Compounding in Ridgeland.

“Many of the relationships overlap, and individuals often played more than one role in a particular scheme,” the complaint said.

Walters and Thomley were members of Prime Care Marketing and Total Care Marketing, which were marketers for World Health and Advantage pharmacies, respectively. In addition, Walters was a member of Advantage Pharmacy and controlled his wife Dorothy’s interest in Medworx. Thomley also became a member of Advantage.

Barrett was a member of World Health, which later split into two entities — World Health Industries (later AspireRx) and OpusRx, where he became a managing member.  Spell is a pharmacist licensed in Mississippi who became a managing member of Medworx.  These pharmacies and others were searched in January 2016, as part of a multiple state and federal agency investigation.

Hundreds of people were interviewed, and 24 vehicles, five planes and two boats were seized, along with money from 80 bank accounts totaling $15 million, Mississippi Bureau of Narcotics spokeswoman Dolores Lewis said in an earlier story.

A civil forfeiture complaint outlining dozens of property seizures was filed with the U.S. District Court’s Southern District of Mississippi on Jan. 20, 2016, the day before the pharmacy searches were conducted.  Other searches and seizures were conducted later in January 2016 as well as in March and May.  To date, no criminal charges appear to have been filed in the Southern District, which has jurisdiction over the civil proceedings.

The properties listed in the civil forfeiture complaint, however, are “involved in or traceable to one or more conspiracies by individuals and entities associated with” the three Mississippi pharmacies.

“The United States seeks forfeiture of the properties as proceeds traceable to specified unlawful activities, specifically health care fraud, mail fraud and wire fraud, and conspiracies to commit such offenses, and as property involved in and traceable to property involved in a scheme to launder the proceeds thereof.”

Attorneys for Walters, Thomley, Barrett and Spell could not be reached for comment Wednesday evening. Attempts to reach a government spokesman also were unsuccessful.  According to the amended complaint, compounded prescription sales were a very small portion of the pharmaceutical market before 2012. However, between 2012 and 2015, those costs skyrocketed, “prompting a closer look by private and public health insurance industry officials.”

“That closer look revealed a business culture riddled with systematic, institutionalized wire, mail and health care fraud, that in only three short years, left health care access at risk for some of this country’s most vulnerable populations, including veterans, the disabled and the elderly,” the complaint states.

The fraud allegedly generated hundreds of millions of dollars for the pharmacies and individuals who took part in them.

According to the complaint:

•Advantage Pharmacy received at least $155 million for compound medications from public and private health care insurers between June 6, 2012, and Feb. 28, 2016. World Health and its affiliates received around $120 million, and Medworx was paid at least $130 million.

•TRICARE alone paid more than $161 million to the three pharmacies. TRICARE is the Department of Defense’s military health care system.

The agency paid World Health more than $24 million between July 12, 2012, and April 2015 for compounded medications, “nearly all of which were associated with a marketer illegally paid a kickback for each prescription.” TRICARE also was billed nearly $11 million by RX Pro for compounding medications.

•Between June 6, 2012, and Jan. 20, 2016, Advantage was paid at least $39 million by TRICARE and Medworx between April 17, 2013, and March 15, 2016, received around $87 million from TRICARE, all for compounding medications.

Advantage and Medworx also filed hundreds of claims with the U.S. Postal Service, totaling around $3.2 million.

The amended civil complaint uses Spell’s rapid accumulation of wealth as an example of the financial incentives that motivated the fraud.

“Prior to joining Medworx in 2014, Spell earned less than $200,000 a year,” the complaint said. “After managing Medworx for only 18 months, he was able to amass assets estimated to be worth more than $12 million.”

 

Source   clarionledger.com