Biloxi man, pharmacist charged in multi-million dollar pharmacy fraud case

July 14--A Biloxi man and the owner of a Lamar County pharmacy have been charged in a multi-million dollar health care fraud conspiracy involving compounded medications and insurance fraud.

The Department of Justice on Thursday announced Gerald Jay Schaar, 46, of Biloxi, and James May, 40, have been charged by the U.S. Attorney's Office in the largest-ever national health care fraud investigation by the Medicare Fraud Strike Force.

Schaar and May are among 412 defendants charged in 41 federal court districts around the nation, a news release said.

The conspiracy is said to have involved fraudulent billing for prescription drugs and compounded medications that were not a medical necessity and were never actually provided to the beneficiaries. The prescriptions allegedly were billed to Medicaid, Medicare and TRICARE, which provides health insurance to members of the armed forces, veterans and their dependents.

The two men are being prosecuted in U.S. District Court in Hattiesburg, where both had initial court appearances Wednesday. Their attorneys have notified the court of their intent to change their pleas July 25 before Judge Keith Starrett.

Schaar, as a marketer for May's pharmacy, Advantage Pharmacy, solicited doctors and others to write prescriptions for compound topical creams without seeing the patients, according to his charging document.

Compounded medicines are prescribed based on individual ingredients to meet a patients' needs and are mixed by a pharmacist.

Schaar and others are accused of falsifying patient records to conceal the crimes, a bill of information says. He also is accused of receiving kickbacks for part of $2.3 million the pharmacy received in reimbursements.

May's pharmacy allegedly received about $192 million in reimbursements from TRICARE and other health benefit programs for the compound topical cream prescriptions. The pharmacy reportedly did not collect patient co-pays or paid the co-pays to avoid raising attention.

According to his charging document, May received a portion of the reimbursements and transferred some of the proceeds into a money market account in his name. Funds of more than $325,000 have been seized from two bank accounts that bear his name.

Documents allege both men participated in the conspiracies for about three years: May from January 2012 through December 2015, and Schaar from October 2014 through sometime in January.

Agencies investigating the case include the Mississippi Bureau of Narcotics, FBI, Internal Revenue Service, Defense Criminal Investigative Service and the Health and Human Services Office.

Robin Fitzgerald: 228-896-2307, @robincrimenews

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