Four Plead Guilty in Multi-Million Dollar TRICARE Scheme

LITTLE ROCK, Arkansas, Oct. 18 -- The U.S. Attorney for the Eastern District of Arkansas, Cody Hiland, issued the following news release:

Cody Hiland, United States Attorney for the Eastern District of Arkansas, Diane Upchurch, Special Agent in Charge of the Little Rock Field Office of the FBI, and Artie DeLaneuville, Acting Special Agent in Charge of the Dallas Regional Office of the U.S. Department of Health and Human Services, Office of the Inspector General (HHS-OIG), announced today the guilty pleas of Brad Duke, 43, of Little Rock, Charlotte Leija, 38, of Conway, Michael "Chance" Beeman, 48, of Maumelle, and Michael Sean Brady, 50, of Little Rock, to conspiring to violate the Anti-Kickback Statute. Duke pleaded guilty on October 3, while Leija, Beeman, and Brady all pleaded guilty on Wednesday before Chief United States District Judge Brian S. Miller, who will sentence the group at a later date.

As has been widely reported, TRICARE (our military's health insurer) paid nearly $2 billion for compound prescription drugs in 2015--an eighteen-fold increase over previous years--prompting investigations around the country.

Duke, who worked as a medical sales representative in Little Rock, promoted prescription pain cream, scar cream, and supplements for a Mississippi-based compounding pharmacy, earning a share of whatever the pharmacy was paid on prescriptions issued by affiliated doctors. After learning TRICARE would pay tens of thousands of dollars per month per patient for compounded drugs, Duke focused upon generating prescriptions for those with TRICARE insurance.

Duke paid patient recruiters, including Beeman and Brady, to find TRICARE beneficiaries to receive prescriptions, telling them a doctor would sign the prescriptions without consulting patients. Patient recruiters forwarded beneficiary insurance information to Duke, which he then routed to local medical assistant Charlotte Leija, whom Duke paid to file the prescriptions under the name of the doctor for whom she worked.

In less than one year, the scheme generated over $10 million in compound prescriptions for over 100 TRICARE beneficiaries hailing from as far west as Chula Vista, Calif., to as far east as Foxborough, Mass. Duke paid patient recruiters more than $2 million to find the beneficiaries and over $250,000 to Leija to issue the prescriptions.

"Duke's scheme resulted in millions of dollars of fraud and waste to our taxpaying citizens," U.S. Attorney Hiland said. "This office is determined to root out the criminal fraud in our nation's health care programs."

Under the terms of their plea agreements, Duke, Leija, Beeman, and Brady each face up to five years in federal prison and together will forfeit nearly $1.9 million in illicit proceeds. More charges involving additional defendants are expected.

"These pleas are a reflection of Duke's greed to promote prescriptions for compounded drugs in a kickback scheme for his own profit," stated SAC Upchurch. "The United States Attorney's Office, HHS-OIG, and the FBI will aggressively pursue providers who violate the law for personal gain."

"Any time fraudulent claims are submitted for payment, the nation's health insurance programs suffer," said Acting SAC DeLaneuville. "Along with our law enforcement partners, this office will continue the important mission of protecting the financial integrity of our nation's health care systems, and bringing to justice those individuals who deliberately manipulate those systems to obtain federal dollars to which they are not entitled, especially funds designated for providing vital health care services to our military veterans."

If you or someone you know was approached about getting compounded prescription drugs, please contact usaare.TRICAREtips@usdoj.gov. (link sends e-mail)

The crime of conspiring to violate the Anti-Kickback Statute, 42 U.S.C. * 1320a- 7b(b), is punishable by up to five years in prison, a fine of not more than $250,000, and up to three years of supervised release. This case was investigated by the FBI and HHS- OIG, and prosecuted by Assistant United States Attorney Alexander D. Morgan.