By George F. Indest III, J.D., M.P.A., LL.M., Board Certified by The Florida Bar in Health Law
On November 17, 2023, three Florida men were sentenced to prison for their roles in a prescription drug scheme in which they paid and received bribes and kickbacks. They were each charged in an indictment filed in the U.S. District Court for the Middle District of Florida, with one count of conspiracy to defraud the United States and to pay or receive health care kickbacks.
The Florida Men Involved.
One of the men involved in the scheme, James Wesley Moss, was the CEO and part-owner of the pharmacy involved in the alleged fraud. David Byron Copeland was the other part-owner and senior sales manager of the pharmacy. The third man, Michael Gordon, was the lead sales representative for the pharmacy. The pharmacy was Florida Pharmacy Solutions Inc. (FPS), located in Zephyrhills, Florida.
The Kickbacks and Bribes.
The men targeted physicians who treated TRICARE beneficiaries.
TRICARE is the federal healthcare benefit insurance program that provides coverage for active duty and retired service members and their families. This means that the services were paid for with your tax dollars.
The Florida men would pay kickbacks and bribes to physicians to encourage the referral of prescriptions to the pharmacy. Part of the bribes and kickbacks included expensive dinners and hunting trips. Everyone knows that unless you are a U.S. Supreme Court Justice, you are not able to get away with taking free expensive dinners and hunting trips.
“Test-Billing” as a Tool of Fraud.
The part-owners and sales representative of the pharmacy engaged in what is called “test billing.” “Test billing” is a favorite of fraudsters, especially those seeking to bilk Medicare and TRICARE. It is used to develop the most expensive combination of compounded drugs to maximize reimbursement from TRICARE.
How “Test Billing” Works.
Here’s how it works. The fraudsters submit a “test bill” for a very expensive product to the insurer or payor. If it goes through and is paid, they then submit a bill the next time for a more expensive medication. If it gets paid, they keep doing this until they reach the point at which the payor denies the claim. They then will bill at the next lower price and continue until the payor gets wise and stops paying for that medication.
The other variation on this theme is that if they submit a bill and the payer denies payment, they try billing less expensive products until they find the most expensive one the payer will actually pay. Then all similar prescriptions are billed at that price, regardless of how much they paid for the medications and regardless of what the fair market value of the medication really is.
The Scheme’s Profits.
The Florida men billed more than $54 million to TRICARE for compounded prescriptions. TRICARE paid nearly $41 million to the Florida pharmacy on the claims submitted. Moss, the pharmacy’s CEO, allegedly paid the two co-conspirators millions of dollars in kickbacks based on a percentage of the amount that TRICARE reimbursed for the prescriptions they billed.
The Guilty Pleas and Sentencing.
Moss and Gordon, the CEO and the lead sales representative, pled guilty to the kickback and fraud conspiracy. Moss was sentenced to two years and three months in prison. Gordon was sentenced to one year and six months in prison.
Let’s see, to compute their actual profit from the fraud as a yearly salary based on their prison sentences, would that be $41 million divided by two years and three months, or $18.2 million per year ($1.52 million per month)? Or would it be $41 million divided by both men’s prison sentences for a total of 45 months? The latter for both defendants combined would be only $10.9 million per year (or $911,000 per month) of prison time.
I, myself, might consider some fraud and two years of prison time for $10 million a year while I was in prison. But, alas, I would have to give up the practice of law, my first love, which I, therefore, cannot do. Furthermore, I would hate to put my wife to the test by trying to spend all of those millions while I was in prison, but I think she could do it.
The Conviction and Sentencing.
Copeland, the senior sales manager of the pharmacy, was on trial for his role in the kickback scheme in June 2023. The jury convicted him of two counts of soliciting and receiving illegal healthcare kickbacks and three counts of offering and paying illegal kickbacks.
Copeland was sentenced to four years and three months in prison.
Contact Health Law Attorneys Experienced in Representing Pharmacies and Pharmacists.
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Sources:
“Four Florida Men Charged for Their Roles in a $54 Million Compound Pharmacy Kickback Scheme.” United States Department of Justice Office of Public Affairs. (5 June 2020)
“Man Convicted of $54M Bribery and Kickback Scheme Involving Fraudulent Prescriptions.” United States Department of Justice Office of Public Affairs. (16 June 2023)
Rowland, Brett. “Jury convicts man in $54M scheme to defraud military healthcare program.” The Center Square Florida. (20 June 2023)
“Three Handed Prison Terms for Compounded Drug TRICARE Fraud Scheme.” American Health Law Weekly. (17 November 2023)
“Three Men Sentenced for $54M Fraudulent Prescriptions Scheme.” United States Department of Justice Office of Public Affairs. (14 November 2023)
About the Authors: George F. Indest III, J.D., M.P.A., LL.M., is Board Certified by The Florida Bar in Health Law; he is the President and Managing Partner of The Health Law Firm, which has a national practice. Its main office is in Orlando, Florida, area. www.TheHealthLawFirm.com The Health Law Firm, 1101 Douglas Avenue, Suite 1000, Altamonte Springs, FL 32714, Phone: (407) 331-6620 or Toll-Free: (888) 331-6620.
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Copyright © 2024 George F. Indest III, The Health Law Firm. All rights reserved. No part of this work may be reproduced in any medium for any purpose without the written permission of the copyright owner. The author reserves the right to have its name associated with this work at all times.
