An Arkansas man and a Florida man have been sentenced to prison for their roles in giving kickbacks in compounded cream schemes that defrauded a government insurer of millions of dollars.
Federal prosecutors said Brad Duke, 47, of Little Rock, was the ringleader in a 2014-2015 scheme to have a Mississippi pharmacy whip up multiple compounded pain creams, scar creams and supplements. The pharmacy then billed TriCare, the health insurer for members of the military, their families and veterans, according to a court filing by the U.S. Attorney’s office in Arkansas. Duke received a share of the insurance payments.
After learning that TriCare “paid tens of thousands of dollars per month per patient for the compounded drugs he was promoting, Duke began to offer and pay kickbacks to generate prescriptions,” the prosecutor said in a news release.
Duke paid kickbacks to recruiters, including Michael “Chance” Beema, of Maumelle, Arkansas; Michael Sean Brady, of Little Rock; Jason Greene, of Nashville; Brian Means, of Fort Smith, Arkansas; and Jennifer Sorenson, of McKinney, Texas, prosecutors said. They would find Tricare beneficiaries around the country willing to receive the drugs.
Duke would then get a doctor to sign off on the prescriptions without ever consulting the patients. “All Duke needed was TriCare beneficiary insurance information sufficient to fill out prescription forms,” the U.S. Attorney’s office said.
Duke was sentenced May 3 to 36 months in prison and he must forfeit more than $1 million. The co-conspirators also have been sentenced, with terms ranging from eight months to 28 months in prison.
In late April, Steve Hill, 57, recently of Florida, was sentenced to 18 months in prison for his role in the fraud and for lying to federal agents about it.
Hill, who previously lived in the Memphis area, had spent almost 25 years in medical sales for Fortune 500 companies, prosecutors said. In 2014, he began working with Duke, earning a percentage of whatever TriCare paid for the compounded prescriptions.
Authorities said Hill recruited a Memphis doctor to prescribe the compounded drugs, and route kickbacks to the doctor through a shell corporation formed under the physician’s wife’s name. In just a year’s time, the arrangement generated more than $1 million payments from TriCare and earned Hill more than $345,000, court records show.
In 2017, investigators uncovered the connection to the doctor and the shell corporation and asked Hill about it. He denied paying the spouse. For that, Hill was charged with lying to the agents and was sentenced April 26. He must also pay restitition.
TriCare has been a frequent target of fraudsters in recent years, and critics have said the government program and some pharmacy benefits managers have done a poor job of policing compounding schemes. Swindlers also have taken advantage of workers’ compensation insurers on expensive compounded medications through the years. Prosecutors did not say if Duke and friends had also attempted to bilk comp insurers.
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