Pharmacy owner gets 10 years for $243M health care fraud that ripped off veterans’ program

A Mississippi pharmacy owner who made $29 million in profits from a compounding pharmacy fraud scheme received a 10-year sentence in federal prison Thursday.

Continue Reading Below

Thomas Edward Spell Jr., 51, owned pharmacies that marketed compound medications — drugs mixed specifically for a patient based on a doctor’s prescription — between December 2014 and January 2016, U.S. Attorney Mike Hurst and other federal authorities said. But instead of mixing the drugs based on a patient’s needs, the pharmacy picked formulas to maximize profit through reimbursements from TRICARE — the health care program for members of the military, veterans and their families — and other health benefit programs.

TRICARE reimbursed Spell’s pharmacies for more than $243 million on the fraudulent claims, officials said.

“This defendant ripped off every single military service member, veteran and American taxpayer when he defrauded TRICARE,” Hurst said in a press release.

TRICARE requires that beneficiaries make a copayment to receive medicine. But Spell and others waived the requirement and had their employees buy prepaid and money orders to use toward the copayments, according to the feds. Spell and others also paid kickbacks and bribes to marketers to get prescriptions for compounded medications for patients covered by TRICARE and other lucrative health care benefit programs.

GET FOX BUSINESS ON THE GO BY CLICKING HERE

VIRGINIA SUES TEVA PHARMACEUTICALS SAYING IT MISREPRESENTED DEADLY FENTANYL

Spell used the millions he took in profit from the scheme for investments in his name and the names of family members and various businesses, officials said. He also spent it on cars, boats and property.

Michelle A. Sutphin, special agent in charge of the FBI in Mississippi, called schemes like this “a plague on the nation’s health care systems.”

“Fraud against government-funded health care systems like TRICARE not only cost taxpayers billions each year, but deprives funding for critical medical care and benefits for our current and former military members who bravely serve our country,” Sutphin said in the press release.

DRUG DISTRIBUTOR CONTRIBUTED TO OPIOID CRISIS BY IGNORING SIGNS OF ABUSE, FEDS SAY

Authorities have charged a total of 20 people in the scheme so far, and the investigation is ongoing. Fourteen people have been convicted so far.

In addition to the prison sentence, Spell was ordered to pay $243.5 million in restitution. Officials said they had already seized about $26 million from Spell during the investigation.

READ MORE ON FOX BUSINESS BY CLICKING HERE    

“Thomas Spell systematically defrauded the government and the taxpaying public,” said Thomas J. Holloman III, special agent in charge of the IRS Criminal Investigation’s Atlanta field office. “His desire for money, along with the power and material items it buys, drove him to perpetrate crimes against our health care system and prey upon many of the vulnerable in our society.”