Three Sentenced for Roles in Compounding Pharmacy Kickback and Fraud Scheme

Three men, including two from Florida, were sentenced for their roles in a $54 million pharmacy kickback, bribery, and fraud scheme involving TRICARE. The federal program provides health insurance benefits to active duty and retired service members and their families.

Prison Time

David Byron Copeland of Tallahassee was sentenced to four years and three months in prison following his conviction at trial in June for paying and receiving healthcare kickbacks. James Wesley Moss, of Huntsville, Alabama was sentenced to two years and three months, while Michael Gordon of Fort Myers received one year and six months in prison. A fourth co-defendant, Edward Christopher White, was sentenced to two years and nine months in prison after pleading guilty for his role in the pharmacy kickback and fraud scheme. We first wrote about their indictment in June 2020.

Moss was part owner and CEO of Florida Pharmacy Solutions, a pharmacy that specialized in compounded prescription drugs. These drugs typically are tailored to the needs of an individual patient and therefore are more expensive. Copeland also was a part owner and senior sales manager and Gordon was a lead sales representative.

How the Healthcare Fraud Scheme Worked

According to court documents in this pharmacy kickback and fraud scheme, the three, along with their accomplices, took part in “test billing,” a practice in which the pharmacist submits a phony claim to insurance to see which compound generates the highest reimbursements.

The three targeted physicians whose patients included those with TRICARE and paid them bribes and kickbacks including lavish trips and expensive dinners. In addition to the bribes, pharmacy employees used blanket letters of authorization that allowed for the modification of the prescription components to make them more profitable. The compounded prescriptions included pain and scar creams.

Between late 2012 through mid-2015, the pharmacy billed TRICARE more than $54 million. TRICARE paid approximately $41 million on those claims.

Feds Target Compound Pharmacy Fraud

The federal government has been targeting TRICARE compounding pharmacy kickbacks and fraud for many years. In 2018, the U.S. Department of Health and Human Services Office of the Inspector General released a report on Questionable Billing for Compounded Topical Drugs in Medicare Part B.

The federal Anti-kickback statute prohibits individuals or entities from offering or paying, or from soliciting or receiving, remuneration to induce prescriptions reimbursed by federal healthcare programs (i.e. TRICARE, Medicare, Medicaid).

Enforcement agencies allege that telemarketers promote these medications and market them directly to patients, using physicians or nurse practitioners to essentially rubber stamp needed prescriptions in exchange for payment. The stakes are high since many of these compounded medications come with huge price tags, some in the tens of thousands of dollars per prescription.

Why Compounding Fraud is Rampant

The prices set by compounding pharmacies that take part in fraudulent activities often have no relation to the cost of the drugs used to make the compounds. Instead, they can be as much as the pharmacy chooses to bill.  

A report by the National Academies of Sciences Engineering and Medicine found that while compounded topical pain creams have become an increasingly popular alternative to oral pain medications and opioids, there is a lack of scientific evidence to support their safety or effectiveness.

“Many ingredients used in compounded topical pain creams are not approved by the U.S. Food and Drug Administration (FDA) to topically treat pain. Furthermore, patients may not be aware that compounded topical pain creams are not subject to the same level of quality testing and regulatory oversight as commercially available, FDA-approved topical pain treatments,” the report says.        

Healthcare Fraud Laws

Many states, including Florida, also have anti-fraud and abuse and anti-referral laws (i.e. the Florida Patient Self-Referral Act and the Florida Anti-Kickback Statute) and many medical and pharmacy boards have their own regulations relating to referral practices.

Healthcare fraud investigations involve complex healthcare and pharmacy matters requiring legal counsel with knowledge and experience in TRICARE and healthcare law. Those involved in the industry would be well advised to educate themselves about best practices.

The Health Law Offices of Anthony C. Vitale has been representing clients under investigation for more than three decades. The firm conducts confidential defense investigations and will take you through the process in an effort to reduce or eliminate criminal, civil, licensure and administrative liability.