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Doctors, pharmacists indicted in $100M fraud case

<p><span style="color: rgb(100, 100, 100); font-family: arial, sans-serif; font-size: 11px; font-style: italic; background-color: rgb(250, 250, 250);">(Photo: Getty Images/iStockphoto)</span></p>

PHOENIX — A dozen doctors, pharmacy owners and marketing pros have been accused of a kickback scheme that prosecutors allege involved a sham medical study used to bilk up to $102 million from the publicly funded federal health program for military family members.

The doctors included Walter Neil Simmons, 47, of Gilbert, Ariz., emergency medicine doctor who has worked at two metro Phoenix hospital chains. He was indicted in October in U.S. District Court in Dallas on one count of conspiracy to commit health-care fraud. The federal charge carries a maximum sentence of 10 years in federal prison and a $250,000 fine.

When reached by phone this week, Simmons said, "I can't make any comments."

Federal prosecutors said the scheme involved prescribing "compounded" drugs such as pain, scar and migraine creams to military families covered by Tricare, the federal health insurance program for active-duty and retired military and family members.

There have been at least two other federal probes alleging pharmacies paid kickbacks to doctors who ordered expensive compounded drugs for patients. One involved a California pharmacy that billed the state's worker's compensation program for pricey markups. In another, a Florida doctor was indicted on a charge of taking kickbacks for sending prescriptions, which billed Tricare and Medicare for creams that cost as much as $21,000 for a one-month supply, according to a federal indictment.

Government oversight bodies also have questioned the spiraling federal spending on these drugs. Medicare spending on compounded topical drugs has surged 3,400% since 2006, the U.S. Department of Health and Human Services' Office of Inspector General reported in June.

Allegations of sham study

The Texas case that resulted in the indictments of Simmons and 11 others centered on a Dallas-based company called CMGRX LLC, or Compound Marketing Group. Federal prosecutors allege that the marketing group arranged kickbacks to doctors who prescribed and Tricare-insured patients who purchased drugs from four compounding pharmacies.

The indictment alleged Simmons teamed with two other marketing group representatives to create a sham medical study named the "Patient Safety Initiative," or PSI study.

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Tricare enrollees were paid study "grants" of $250 per month for each prescription they obtained from a partner pharmacy.

"The defendants and their co-conspirators falsely represented that the study was approved by Tricare and that it was designed to evaluate the safety and efficacy of compounded drugs," the indictment stated. "In reality, the PSI study was not approved by Tricare, was not overseen by a qualified physician, epidemiologist or other medical professional, had no control group, and was not designed to gather any useful scientific data relating to the safety or efficacy of any drug."

Writing prescriptions

The indictment alleged that Simmons also recruited an El Paso doctor, William F. Elder-Quintana, who wrote thousands of prescriptions that cost Tricare $96 million through June 2016. Elder-Quintana and other doctors were paid $60 for each pain or scar creme prescription or $30 for each vitamin prescription, the indictment said.

The indictment also alleged that marketing group employees would contact Tricare's pharmacy-benefits consultant, Express Scripts, to find out whether certain drugs were covered. These employees then would adjust the prescriptions to maximize payments from Tricare "without any regard for the medical necessity for the prescriptions."

The indictment accused marketing group employees of sending prefilled prescription forms to Elder-Quintana, who it alleged would sign the prescriptions after a cursory telephone interview with the patient. Other times, marketing group employees would use a stamp with Elder-Quintana's signature to order prescriptions, the indictment stated.

The other 11 defendants all listed addresses in Texas. Richard Robert Cesario and John Paul Cooper, co-owners and co-operators of CMGRX LLC, initially were charged in February.

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