HATTIESBURG, MS (WDAM) - Federal agencies claim three Mississippi pharmacies, including multiple individuals and entities, defrauded more than $400 million from public and private health insurance providers.
"In total, the pharmacies in this case were paid more than $400 million in fraud proceeds, most of it over just two or three years," according to the complaint filed by the U.S. government.
Individuals associated with the pharmacies had enormous sums of money and purchased items like vacation properties, investment vehicles, luxury cars, boats and airplanes.
In January 2016, members of the Federal Bureau of Investigation, Mississippi Bureau of Narcotics, Internal Revenue Service and multiple other state agencies raided four businesses related to pharmacies in the Hub City.
Those raids kicked-off others in multiple states including Utah, Alabama and Florida as well as other locations across Mississippi.
Federal agents seized millions in assets including dozens of high-priced vehicles such as and not limited to a property in Santa Rosa Beach, Florida purchased at $897,164.90, a 2015 Super Air Nautique G23 boat for $160,510 and a Mercedes Benz G-550 for $119,835.06.
The court filing lists four "key" names involved in the investigation: Wade Walters, Hope Thomley, both of Hattiesburg, Mitchell "Chad" Barrett of Clinton, and Thomas E. "Tommy" Spell, Jr., of Ridgeland.
"Barrett, Walters, Hope Thomley, and Spell were all the central architects of one of the comprehensive health care fraud, kickback, and money laundering scheme that threated the solvency of some health care benefit programs and operated between Jan. 2012 and Dec. 2015," according to the federal documents. "Others also participated in and benefited from the frauds."
- Wade Walters: Walters is a resident of Hattiesburg, Mississippi. Walters founded and was a member of Prime Care Marketing, LLC (“Prime Care Marketing”). Walters was also one of the members of Total Care Marketing, LLC (“Total Care Marketing”), the exclusive marketer for Advantage Pharmacy. Walters became a member of Advantage Pharmacy in or about January 2013. Walters also controlled the ownership interest of his wife, Dorothy Walters, in Medworx.
- Mitchell “Chad” Barrett (“Barrett”) is a resident of Clinton, Mississippi. From approximately December 2012 until or about March 10, 2015, Barrett was a member of World Health. On or about March 10, 2015, World Health Industries split into two entities, World Health Industries (later AspireRx) and OpusRx, LLC. As part of this split, Barrett left World Health Industries and became a managing member of OpusRx.
- Hope Thomley is a resident of Hattiesburg, Mississippi. Hope Thomley was a member, along with Walters, of Prime Care Marketing. Hope Thomley was also a member of Total Care Marketing, along with Walters.
- Thomas E. “Tommy” Spell, Jr. (“Spell”), is a resident of Ridgeland, Mississippi. Spell is a pharmacist licensed by the state of Mississippi. Beginning in or about July 2014, Spell became a managing member of Medworx.
"The United States seeks forfeiture of the properties listed in Attachment A hereto (The Defendant Property) as proceeds traceable to specified unlawful activities, specifically health care fraud, mail fraud and wire fraud…," according to the federal court filings.
Key persons and entities are named in the federal document pertaining to the ongoing investigation.
World Health Industries, Inc, Pro Pharmacy, Located in Jackson, Mississippi, is said to have shipped all of its prescriptions to customers via Federal Express, United Parcel Service and the U.S. Mail.
"World Health operated as a 'hub' for multiple other pharmacies, including but not limited to Van Dev Enterprises, in Port Gibson, Vicksburg Specialty Pharmacy (Vicksburg), Service RX (Ridgeland), Opus Pharmacy (Jackson), and Gluckstadt Pharmacy (Gluckstadt)," according to the court filing. "This method of operation allowed World Health to coordinate the submission of the claims to insurance companies through its affiliate locations. These affiliates also allowed World Health to avoid detection by the insurance programs that had barred World Health from submitting claims."
Advantage Medical and Pharmacy (Advantage Pharmacy) is a compounding pharmacy in Hattiesburg Mississippi. The pharmacy is said to have marketed and sold compounded prescriptions throughout the United States, and shipped the compounded prescriptions via Fed Ex, UPS and the U.S. Mail. They also operated an affiliate location, Advantage Medical Infusion in Hattiesburg.
"In total, three different health care providers wrote prescriptions for Randy Thomley's relatives: an oral surgeon, a nurse practitioner, and an OB/GYN," according to the filing.
Medworx Compounding, LLC (Medworx) was a compounding located in Ridgeland, Mississippi. Documents show they followed the same procedures as Advantage Pharmacy.
"As a result, World Health, Advantage Pharmacy, Aspire RX, and Medworx routinely filled compounded prescriptions for customers for whom no physician had determined medical necessity," according to the complaint
Overview of the scheme:
"Beginning in 2012, World Health, Advantage Pharmacy, and related pharmacies, and in 2014, Medworx and related pharmacies, (collectively "the pharmacies"), by and through their agents and representatives, conspired to commit health care fraud, mail fraud and wire fraud associated with the marketing and sale of compounded medications. Compounded medications are specialized medicines designed to meet unique needs of patients and because of their complexity, yield a high profit margin for the pharmacies that provide them," according to the federal documents.
The billing practices are said to be related to compounded medications and illegal kickbacks paid to marketers. The investigation alleges it was a "widespread scheme" to defraud the Defense Health Agency or (Tricare) and other federal health care programs including Medicare and Medicaid and other private companies.
"To maximize profits from the fraud scheme, the pharmacies created their own demand for compounded medications. The pharmacies illegally engaged a series of marketers to provide incentives to doctors to write prescriptions for compounded medications and divert patients to the pharmacies," according to the documents. "The pharmacies also used the marketers to identify complicit doctors willing to write prescriptions for compounded medications for patients whom they never saw and where there was no determination of medical need."
The pharmacies allegedly used the marketers to execute an illegal kickback scheme to compensate the participating doctors involved in the investigation.
"To conceal the kickback scheme and fraudulent billing for compounded medications, the pharmacies also engaged in other fraudulent billing practices, such as automatically refilling prescriptions despite patient requests to stop and structuring billing for prescriptions in smaller amounts multiples times to avoid price caps built into the insurer's claims adjudication system," according to the federal documents.
This is a civil filing in federal court, at this time, no criminal complaints have been filed on the federal level.