An Attorney, Pharmacist, and Sales Representative Walk into a Courtroom

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Corrupt doctor with money in his pocket

Healthcare fraud rarely involves a singular fraudster. Usually, a ringleader and several co-conspirators are involved in any given case. (Fraudsters like to help each other along until they get their take of the deal, then they’re off to the next scam.) In today’s fraud scenario, a trio made up of an attorney, a pharmacist, and a sales representative have all pleaded guilty for their roles in a conspiracy to receive health care kickbacks and scam healthcare programs out of millions of dollars. (Sounds like a bar joke, only they walked into a courtroom.)

Daniel Walker of Lewes, Del., Michael Beatty of Pasadena, Md., and Seth Myers of Crystal Lake, Ill., all pleaded guilty to conspiracy to defraud health care services. Their scheme involved paying for referrals so that members of the conspiracy would fraudulently receive higher reimbursements from TRICARE, Medicare, and Medicaid programs in Virginia and Maryland.

Walker was a medical sales representative for a pharmaceutical company based out of Alexandria, Va.  He would direct health care providers to have prescriptions, which were manufactured by his employer, to be filled by Royal Care pharmacy in exchange for kickbacks. (Maybe he should have stuck to sales and saved himself from facing an indictment.)

Royal Care received reimbursements from TRICARE, Medicare, Virginia Medicaid, and Maryland Medicaid for the referrals Walker provided. Royal Care made $1.2 million in illegal profits during the course of this scheme. In exchange for his referrals, Walker would receive 25 percent of all prescription sales fulfilled by Royal Care. In total, he received $573,000 in kickbacks. (Looks like Walker walked away with a pretty penny.)  

Co-conspirator Beatty worked as a pharmacist in Fallston, Md., and Seth Myers worked as a licensed attorney who represented a physician practicing in Virginia and Maryland. Beatty illegally paid kickbacks to a company controlled by Myers’s client in exchange for the physician referring prescriptions to Beatty. 

The physician referred prescriptions for very expensive compound drugs, which Beatty billed insurance providers for thousands of dollars. These complex medications need to be mixed by pharmacists and are only intended for patients who cannot be treated by traditional FDA-approved medicines. (In this case, patients didn’t need to be treated at all.) 

TRICARE paid Beatty approximately $344,280 leading to his pharmacy making a net profit of $295,782.  Beatty then paid the company controlled by Myers’ client approximately $147,891 in kickbacks for their referrals of compound medications. (Everyone got a little slice of the fraud pie before getting what they really deserved.)

TRICARE paid the pharmacies involved approximately $4.8 million in reimbursements for the compounded prescriptions. Myers and his co-conspirators fraudulently received about $2.6 million in kickbacks from the pharmacies including from Royal Care. (I wonder if Royal Care is accredited with the Bad Business Bureau now.) 

Walker, Myers, and Beatty all pleaded guilty to conspiracy to solicit and receive health care kickbacks. They face a maximum penalty of five years in prison when sentenced in January 2021.

Walker must pay $671,790 in restitution, the same amount he received for his role in the conspiracy. Myers also agreed to forfeit $428,124 as part of his plea agreement, the same amount he received from this scheme. Congratulations to the FBI Washington Field Office for working with Maryland and Virginia law enforcement to identify these individuals and bring them to justice.

Today’s Fraud of the Day comes from a Department of Justice press release, “Three Men Plead Guilty to Healthcare Kickback Conspiracies,” dated September 30, 2020.

ALEXANDRIA, Va. – An attorney, pharmacist, and sales representative have each pleaded guilty to conspiracy to pay or receive health care kickbacks.

“Health care fraud harms us all and steals valuable resources from those who are in need,” said G. Zachary Terwilliger, U.S. Attorney for the Eastern District of Virginia. “Our office and our law enforcement partners will continue to devote its resources and time to uncovering and detecting health care fraud and those individuals who put their greed above the interests of the public good.”

 

 

 

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Larry Benson
Larry Benson is currently the Director of Strategic Alliances for Revenue Discovery and Recovery at LexisNexis Risk Solutions. In this role, Benson is responsible for developing partnerships for the tax and revenue and child support enforcement verticals. He focuses on embedded companies that have a need for third-party analytics to enhance their current offerings.