Feds nab 10 more in $100 million Tricare fraud
Federal officials arrested 10 people Friday and is charging them in a $100 million healthcare fraud scheme against Tricare, the health insurance program for members of the military and their families.
The defendants allegedly paid Tricare beneficiaries at Fort Hood in Killeen, Texas, for obtaining and filling prescriptions for compounded drugs like pain creams, scar creams, migraine creams, and vitamins, according to the Department of Justice and the U.S. Attorney's Office for the Northern District of Texas.
From October 2014 through June 2015, Tricare paid more than $102 million for these compounded drug prescriptions.
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The defendants disguised payments to Tricare beneficiaries as grants for participating in a medical study that never existed.
The "medical study" was actually used to compile a list of Tricare members who had filled prescriptions so the defendants could calculate how much to pay them, officials said.
Prescribing physicians and marketers were allegedly paid kickbacks by the owners of the compounding pharmacy CCMGRX, LLC, in Dallas.
CCMGRX, stands in part for Compound Marketing Group, a company formed in September 2014 to primarily market compounded pain and scar creams to military members, and on behalf of various compounding pharmacies, according to the indictment.
Richard Robert Cesario, 49, of Plano, served as CCMGRX's CEO and treasurer; John Paul Cooper, 47, of Southlake, Texas, was its president and secretary, officials said. Both remain in federal custody on charges in a federal indictment returned in February.
Neither had any medical, nursing or pharmaceutical licensing or education, authorities said.
There was evidence that Cooper and Cesario stated an intent to harm any associates or employees who turned on them and fled to Costa Rica, according to court records.
To disguise the source of the kickbacks, the defendants created a charity through which the payments could be funneled.
In one year, about $2.8 million was paid to the "Freedom From Pain Foundation, a registered tax-exempt charitable foundation. The majority of the funds were paid to Tricare beneficiaries and doctors, authorities said.
CCMGRX ceased operations in mid-2015, shortly after Tricare announced changes to its coverage of compounded drugs.
The Federal Bureau of Investigation and the Defense Criminal Investigative Service arrested nine people. A tenth defendant surrendered to the FBI.
All were charged on 35 counts in an indictment unsealed in Dallas on Friday, said U.S. Attorney John Parker.
Those charged are: Dr. Walter Neil Simmons, 47, of Mesa, Arizona; Dr. William F. Elder-Quintana, 50, of El Paso, Texas; Jeffrey Eugene Fuller, 51, of Dallas, Texas; Andrew Joseph Baumiller, 37, of Dallas, Texas; Jeffry Dobbs Cockerell, 61, of Houston, Texas; Steven Bernard Kuper, 43, of Burleson, Texas; Ravi Morisetty, 42, of Irving, Texas; Joe Larry Straw, 46, of Frisco, Texas; Luis Rafael Rios, 50, of Killeen, Texas; and Michael John Kiselak, 49, of Southlake, Texas.
Simmons served as the chief medical officer for CCMGRX and helped Cesario and Cooper create the study, officials said. Elder-Quintana worked as a contract physician with CCMGRX.
Compounding pharmacies and companies owned by the defendants or named in the indictment include Aztec Medicus, Trilogy Pharmacy, 360 Pharmacy Services, FW Medical Supplies, also known as Dandy Drug, and Dena Group, operating under the name Alpha Pharmacy.
If convicted, the charge of conspiracy to commit healthcare fraud carries a maximum sentence of 10 years in federal prison and a $250,000 fine.
Cesario and Cooper are also each charged with 14 counts of payment and/or receipt of illegal remuneration. Each of the remaining defendants, with the exception of Simmons, is charged with at least one count of payment and/or receipt of illegal remuneration.
If convicted, they face a maximum sentence of five years in federal prison and a $250,000 fine. Restitution may also be ordered.
The defendants, upon conviction, would have to forfeit any real estate property traceable to the offense; funds in bank accounts and investment accounts; numerous vehicles, boats and recreational vehicles; firearms; jewelry and artwork; and other various investments.
Fuller and Baumiller, the owner and president, respectively, of Trilogy Pharmacy, were scheduled for a hearing Thursday. The remainder of the defendants, other than Cesario and Cooper, were released on bond.
"Exhaustive investigative work by FBI and DCIS special agents and investigators not only led to today's arrests, but to the identification and seizure of millions in assets that these defendants derived from their participation in this massive scheme that caused the Tricare health insurance program--designed for our military personnel, veterans and their families--to suffer more than $100 million in actual losses," Parker said.
Twitter: @SusanJMorse
