Feds say Bay Area was hot spot for pharmacy fraud

Image 1 of 3

Six people wearing sunglasses slowly walk toward the camera with the downtown Tampa skyline in the background. The voice-over describes them as “wolves, self-made investors worth millions.”

Centurion Marketing’s recruiting video then cuts from one shot to the next of fancy cars and stacks of cash. "This time the wolves are throwing it to you,” the voice-over continues over a cinematic soundtrack. “Do you have what it takes to run with the pack?"

The video does not say what kind of work Centurion Marketing did, or why they wanted to recruit more “wolves.” 

In court documents, federal prosecutors say the Wesley Chapel-based enterprise was just one of the local players that took part in a scheme to bilk the military healthcare program -- one very expensive tube of compound pharmaceuticals at a time.

Some of those same fancy cars featured in the video have now been seized by the feds while a criminal investigation into the alleged fraud continues. Centurion Marketing and its owners declined to comment for this story.

With the Tampa Bay area full of military families and retirees, the region became ground zero for the Tricare fraud that was perpetrated in hot spots around the country, said A. Lee Bentley, United States attorney for the federal district that spans from Jacksonville to Ft. Myers and Orlando to Tampa.

"The victim in this is the United States government, but more specifically, service men and women. This is truly the case of greedy fraudsters picking the pockets of military families," he said.

At the center of the scheme: compound pharmaceuticals, usually in the form of custom-made creams, intended for use when no other drug on the market can meet a patient's needs.

Federal investigators say the scheme spread like wildfire starting around 2013. Some compounding pharmacists discovered a loophole: They could charge Tricare per ingredient -- even ingredients that were not FDA approved. Unlike private insurance companies or even other federal health programs, Tricare had generous policies that did not require proof of medical necessity or verification that no commercially-available drugs could meet a patient’s needs. 

To put it in context, the Defense Health Agency reports paying $5 million for compound pharmaceuticals in 2004. A decade later, that skyrocketed to more than $500 million. By the time Tricare closed the loophole last year, it had paid nearly $2 billion for compound pharmaceuticals.

Bentley says that increase was due almost entirely to fraud: Pharmacies filled prescriptions that patients didn't need and charged the federal government up to 100 times what it actually cost to make it.

"In many cases, we're able to establish fraud because the patient didn't have a patient-doctor relationship,” he said. “There may be other cases in which the doctor was writing the same prescription for every single patient he saw."

The Tricare fraud operated in a trifecta of marketers, doctors and pharmacists who established agreements to work together. Marketers found and recruited the Tricare beneficiaries to go to certain participating doctors, who would then write the prescriptions that would be filled at certain pharmacies.

Some local pharmacies were charging $10,000 to $20,000 for a tube of pain cream or scar cream and bringing in $5 million to $10 million annually from federal payments.

"The fraud was so rampant; there was a fear on the part of the defense health agency that it may have trouble providing the medical insurance that service men and women needed," Bentley said. 

Investigators say some marketers promoted the tubes as miracle creams or told patients they could get a $100 gift card just for trying them.

"I do think there were many patients who did not realize they were part of a fraudulent scheme. There actually were many patients who had come to us and said, I felt like something was wrong," Bentley said.

Since last year, the U.S. Attorney’s Office for the Middle District of Florida has recovered more than $50 million dollars to settle civil allegations against doctors, pharmacists and doctors since last year. While the civil investigations continue, prosecutors have just begun filing criminal indictments related to violations of the False Claims Act.

Bentley says his office is not going after patients, but focusing on the pharmacies, doctors, and marketers who knew, or should have known, that what they were doing was wrong.

“They were being paid huge amounts of money for every customer they brought in. I think that ought to be a clue there's something wrong,” Bentley added. “There's an old saying: If it's too good to be true, it probably is.”