Decatur man charged in $10 million federal health insurance fraud

Oct. 03--A Decatur compounding pharmacy owner has been charged with conspiracy to defraud a federal health insurance program out of more than $10 million, according to the U.S. Attorney's Office.

John Christopher Lemley, 51, was charged Monday, and federal officials are asking him to forfeit nearly $1 million of proceeds from the alleged fraud, according to a statement from the U.S. Attorney's Office.

In conjunction with the one-count information filed in U.S. District Court, prosecutors also filed a plea agreement with Lemley. Lemley must appear before a judge to formally enter a guilty plea.

The plea agreement requires Lemley to forfeit $918,234 and a 2015 Lexus Gx-460 Premium he bought with criminal proceeds, according to the statement. Most of this has already been seized, prosecutors said.

He faces a maximum sentence of five years in prison.

Lemley owned Southern Compounding and Apotheca Supply, which both operated in a suite on U.S. 31 South, according to the U.S. Attorney's Office. Lemley also had a 20 percent membership interest in Medworx Sunflower LLC, an affiliate of Medworx Compounding pharmacy in Ridgeland, Mississippi, according to his plea agreement.

Lemley is accused of conspiring with others at Medworx Sunflower and Southern Compounding to defraud TRICARE, a U.S. Department of Defense health care program, and two third-party prescription drug program administrators Express Scripts and Optum Rx Inc., according to the statement.

Part of the conspiracy included Lemley improperly contracting with Medworx Compounding to refer prescriptions to Southern Compounding, paying kickbacks as incentives for independent sales representatives to refer TRICARE prescriptions, selling misbranded over-the-counter medicine and prescription drugs and failing to reverse claims on prescriptions Lemley knew were forged, according to court records.

Regulations prohibit Southern Compounding from subcontracting any of its work, but Southern entered a management agreement with Medworx in early 2015, according to Lemley's plea agreement. Medworx referred prescriptions to Southern Compounding, which filled the prescriptions and billed third-party administrators for them, the plea agreement reads.

These third-party administrators then sent almost all the payments to Medworx, which returned a portion of the payments, a total of $918,234, to Lemley, according to the plea agreement.

In the 13 months before the management agreement, TRICARE paid claims of about $215,561 to Southern. In the two months following the February 2015 management agreement, TRICARE paid about $10.5 million in claims to Southern through ESI, the plea agreement reads. More than 90 percent of the $10.5 million was profit, according to the U.S. Attorney's Office.

Lemley then transferred about $10.2 million to Medworx, most of which was used to fund kickbacks to the independent sales representatives, according to the plea agreement.

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