Prosecution, defense rest in Diaz trial

Prosecution, defense rest in Diaz trial
Dr. Diaz entering the federal courthouse in Hattiesburg on Thursday, March 1, 2018. (Photo source: WDAM)
Kay Diaz (left) and Albert Diaz (right) leaving the William M. Colmer Federal Building Thursday after District Keith Starrett dismisses court for the day. (Photo Source: WDAM)
Kay Diaz (left) and Albert Diaz (right) leaving the William M. Colmer Federal Building Thursday after District Keith Starrett dismisses court for the day. (Photo Source: WDAM)
Albert Diaz and his wife, Kay Diaz, hug their daughters as they depart from the William M. Colmer Federal Building after the end of the fourth day of his trial.
Albert Diaz and his wife, Kay Diaz, hug their daughters as they depart from the William M. Colmer Federal Building after the end of the fourth day of his trial.

HATTIESBURG, MS (WDAM) - God knows the truth.

That was Albert Diaz's response after a nearly nine-hour day of testimonies Thursday at the William M. Colmer Federal Building. Diaz took the stand maintaining his innocence in the 16-count indictment against him.

"I didn't know about all of this fraud with the government," said Diaz.

During his testimony, Diaz was adamant about his actions when approached by Jay Schaar--- a former pharmaceutical sales representative with Advantage Pharmacy charged in the alleged scheme. Schaar testified that he asked Diaz to write compounded medication prescriptions including scar and pain cream and wellness capsules for patients.

"I didn't get any money," he said. "I didn't do it for that. I thought I was helping people."

Diaz says Schaar told him the patients he was expected to write prescriptions for were already using the compounded medications. He went on to say that he was fearful that if the patients switched to the medication in pill form that they would get addicted to them in the long-run to opiods. So, because their doctors denied prescribing the pain cream, he was willing to write the prescription on the belief that he would see them for a follow-up.

"He promised me he would have the patients to me two weeks from one month when I wrote the prescription," said Diaz.

Ultimately, Schaar never brought the patients and Diaz continued to write the prescriptions over a period of time.

After a lengthy cross-examination of the prosecution's final witness by the defense, the government rested its case against Diaz.

The defense made a motion to dismiss several of the charges against Diaz.

"There's insufficient proof of any conspiracy," said defense attorney John Colette, adding Diaz didn't know the prescriptions were coming from Randy Thomley --- who allegedly received funds from the scheme or they (Schaar and Thomley) were charging people. "It's abundantly clear today, as it was before they indicted him, he didn't get a dime."

After hearing the arguments over the motion, U.S. District Judge Keith Starrett overruled it.

"He knew what he was doing was wrong," said Starrett. "His motivation is unusual or questionable. The agreement to prescribe without seeing people was, in fact, carried out. It was no maybe. It was done. Those admissions came out of Dr. Diaz's mouth."

Diaz, a Biloxi-based physician, is charged in an alleged scheme to defraud TRICARE, a healthcare program for uniformed service members and their families.

According to the Department of Justice, Diaz was "prescribing medically unnecessary compounded medications, some of which included Ketamine, a controlled substance, to individuals without first examining the individuals for the purpose of having a Hattiesburg-based compounding pharmacy dispense the medically unnecessary compounded medications and to have TRICARE reimburse the compounding pharmacy for dispensing the medications."

The federal indictment says between October 2014 and December 2015, TRICARE reimbursed the pharmacy over $2.3 million for medications prescribed by Diaz. Records also show he falsified patient records by indicating that he examined individuals before prescribing them compounded medications, all of which Diaz admitted to doing on the stand. The Food Drug and Administration describes compounding as a combination, mix or alteration of ingredients of a drug to make a medication to fit the needs of a specific patient.

Shortly after 10 a.m. Thursday, the defense presented its case by starting with two fact witnesses. Thivian Harry, a medical assistant at Diaz's office, confirmed the doctor used a signature stamp at his practice. She said Diaz used the stamp for the purpose of notating proof of pregnancy letters and doctor's excuses.

"I have never seen anyone use that stamp on a prescription," said Harry, whose worked at Diaz's office 10 years. "I have never seen him (Diaz) use it."

Up next was Diaz's office manager of eight years, Nasharra Jones.

During Jones' testimony, she discussed the typical practices at Diaz's office. Jones mentioned never receiving phone calls from Advantage Pharmacy, a Hattiesburg-based compounding pharmacy that dispensed prescriptions allegedly signed by Diaz, or signing prescriptions left by Schaar. On Wednesday, Schaar told jurors that he left prescriptions at Diaz's office for his signature and came back to retrieve them after they were signed either by him manually or with a signature stamp.

"I have never seen Dr. Diaz use the stamp," said Jones.

During Jones' cross-examination, she mentioned that Diaz's signature stamp went missing, but didn't specify the length of time or if it was ever recovered. It was the first time during the court proceedings that anyone mentioned that the signature stamp was unaccounted for. As the prosecution showed various prescriptions with what appeared to be Diaz's signature--- stamped or signed--- Diaz was consistent about his non-use of stamps for prescriptions.

"I don't use stamps," he said. "I have never used any stamp on a prescription."

In addition to the defense's fact witnesses, various character witnesses were called to speak on their knowledge of Diaz's reputation in the Gulf Coast community where he lives and works. Tanya Cooper, a mentee, was emotional as she reflected on her relationship with Diaz. She began to cry when she described the impact of Diaz's mentorship during her career as a doctor.

City of Gulfport councilwoman, Ella Holmes-Hines also described Diaz as "extremely warm" and "extremely professional" in her interactions with him. Hines stated he was her obstetrician and gynecologist for the birth of her child and remained a client over the years.

"Dr. Diaz is an excellent doctor and he is a great person," said Hines. "I will stay with him as long as he is in practice."

Former colleagues shed light on their dealings with him and Schaar during their testimonies including Paul Pavlov. The D'Iberville family doctor has known Diaz for over 30 years.

"Dr. Diaz is honest and truthful," Pavlov said. "He says what he means and means what he says."

Pavlov also spoke to the credibility of Schaar in the role of a "drug rep."

"I didn't find him to be truthful in what he was selling me," he said.

During the prosecution's cross-examination of Pavlov, they asked about his customs as a doctor in comparison to Diaz's. When asked would he write prescriptions for patients without seeing them first to evaluate their condition, Pavlov told jurors that it wasn't an unusual practice for doctors to do so.

'It depends on certain circumstances," said Pavlov.

Jim Corder, a 28-year physician, also agreed with Pavlov when asked the same question by the prosecution.

"It can be times especially if you have a patient you're cross-covering for," he said.

The prosecution also asked Pavlov and Corder would they falsify documents for patients they've never seen and both said, "no."

The defense rested their case after several testimonies including Diaz's.

Diaz, who appeared uneasy on the stand, said Schaar's actions landed him in a seat flanked by attorney's.

"He lied to me on many occasions and that's why I'm here," he said.

He testified that he went back to Hattiesburg after he was notified of the audit by TRICARE and falsified patient charts, because he didn't want to lose his license after 40 years.

"You have no idea how hard I worked for it and what it means to me," Diaz said.

If Diaz is convicted, he faces 305 years in jail and fines up to $7.5 million.

The trial resumes tomorrow at 9:30 a.m. Stay with WDAM for the latest information.

You can find the details from the previous days of the trial here:

Day 1: Trial begins in multi-million dollar pharmacy fraud scheme