Compounding Pharmacy Owner Charged with $10 Million Health Care Fraud

[nitpicker]

https://www.justice.gov/usao-ndal/pr/compounding-pharmacy-owner-charged-10-million-health-care-fraud

Department of Justice
U.S. Attorney’s Office
Northern District of Alabama

FOR IMMEDIATE RELEASE
Monday, October 2, 2017

Compounding Pharmacy Owner Charged with $10 Million Health Care Fraud

BIRMINGHAM – Federal prosecutors today charged the owner of a Decatur compounding pharmacy with conspiracy to defraud a federal health insurance program out of more than $10 million. U.S. Attorney Jay E. Town, Food and Drug Administration, Office of Criminal Investigation, Miami Field Office, Special Agent in Charge Justin Green and Defense Criminal Investigative Service Special Agent in Charge John F. Khin announced the charge. The U.S. Attorney’s Office charged JOHN CHRISTOPHER LEMLEY, 51, of Decatur, with the conspiracy and seeks to have him forfeit nearly $1 million as proceeds of the fraud. Most of that amount already has been seized from bank accounts held by Lemley or his businesses, according to the charges.

In conjunction with the one-count information filed in U.S. District Court, prosecutors also filed a plea agreement with Lemley. As part of that agreement, Lemley agrees to forfeit $918,234, along with a 2015 Lexus Gx-460 Premium purchased with criminal proceeds. Lemley must appear before a judge to formally enter a guilty plea.
(snip)

Lemley owned a Decatur pharmacy that operated as Southern Compounding. He also owned Apotheca Supply, which was licensed to relabel and repackage pharmaceutical drugs and was located in a suite that adjoined Southern Compounding on U.S. Highway 31 South. Lemley also had a 20 percent membership interest in Medworx Sunflower LLC, an affiliate of Medworx Compounding, a compounding pharmacy in Ridgeland, Miss., according to the information and plea agreement.

Between February 2015 to January 2016, Lemley conspired with others at Medworx Sunflower and Southern Compounding to defraud TRICARE, a U.S. Department of Defense health care program, and third-party prescription-drug program administrators Express Scripts Incorporated and OptumRx Inc., according to the court documents. Southern Compounding submitted prescription reimbursement claims to TRICARE as part of ESI’s pharmacy network. The pharmacy submitted claims to various insurance plans as part of OptumRx’s pharmacy network. As part of the conspiracy, Lemley conducted the fraud by various means that included improperly contracting with Medworx Compounding to refer prescriptions to Southern Compounding, paying kickbacks to independent sales representatives as incentive to refer TRICARE prescriptions, selling misbranded over-the-counter medications as prescription drugs and not reversing claims on prescriptions Lemley knew were forged, according to the court documents.

Although ESI’s regulations prohibited Southern Compounding from subcontracting any of its work, Southern entered a management agreement with Medworx in early 2015 whereby Medworx referred prescriptions to Southern Compounding, according to Lemley’s plea agreement. Southern filled the prescriptions, billed third-party administrators for them and sent almost all the payments received to Medworx. Medworx then returned a portion of those payments directly to Lemley, the plea agreement says. The amount returned totaled $918,234, representing a distribution for Lemley’s 20 percent membership interest in Medworx Sunflower.

Southern Compounding’s billings to TRICARE soared in the two months after Southern entered its agreement with Medworx, according to the plea agreement. In the 13 months prior to the agreement, TRICARE paid claims of about $215,561 to Southern. In the two months following the February 2015 agreement, TRICARE, through ESI, paid about $10.5 million in claims to Southern, according to the plea agreement. More than 90 percent of that was profit.
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[safeinOhio]

1. More than 90 percent of that was profit?

Better return than selling illegal drugs.