6 Pharmacy Owners, Marketers Charged in $14M Healthcare Fraud Case

The Department of Justice announced that six Dallas, Texas-area pharmacy owners and marketers were charged for their role in a $14 million healthcare fraud scheme involving illegal kickbacks and bribery.

The scheme involved compound drug claims to TRICARE and the US Department of Labor (DOL). The millions of dollars in kickbacks and bribes were paid after doctors prescribed compounded drugs covered by federal insurance, DOJ explained. 

DOJ alleged that Xpress Compounding paid Cockerell approximately $2.4 million, Zeutzius approximately $7.6 million, and Ranelle approximately $4.1 million in illegal kickbacks, for a total of approximately $14.1 million in illegal kickbacks. 

The new indictment was filed May 13 against Richard Hall, 50; Scott Schuster, 48; Dustin Rall, 45; and George Lock Paret, 36, all of Fort Worth; as well as Johnathan Le, 44, of Dallas; and Quintan Cockerell, 38, of Manhattan Beach, Calif.

Two co-defendant marketers, Turner Luke Zeutzius, 38, of Horseshoe Bay, Texas, and Michael Ranelle, 50, of Fort Worth, Texas, previously pleaded guilty to one count of conspiracy to defraud the United States and pay and receive kickbacks

Hall, Shuster and Rall were co-owners of Rxpress Pharmacy and Xpress Compounding, compound pharmacies located in Fort Worth, Texas.  Rxpress Pharmacy and Xpress Compounding employed the same staff and operated out of the same building.

The charges in the indictment include conspiracy to defraud the United States and pay and receive kickbacks, paying and/or receiving kickbacks, conspiracy to commit money laundering by concealing proceeds of the unlawful kickbacks, conspiracy to commit money laundering by engaging in monetary transactions in criminally derived property, and engaging in monetary transactions in criminally derived property.

DOJ said that Hall, Schuster, Rall, Paret and Le devised a scheme to make kickback payments to marketers through Xpress Compounding for the referral of federal prescriptions.  

The marketers were falsely made to appear that they were “bona fide employees” of Xpress Compounding, DOJ alleged. But the marketers were paid as 1099 contractors by Rxpress Pharmacy, the superseding indictment stated.

The co-owners spent proceeds of the fraud to further enrich themselves and others through the purchase of luxury vehicles and chartered vessels, among other property.

DOJ noted that the charges in the indictment are allegations and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

The DOJ announcement comes at the heels of a May 14 announcement that Apotex Corp, a generic pharmaceutical company, agreed to pay $24.1 million criminal penalty for the role it played in antitrust violations from May 2013 to December 2015.

Apotex is the fourth company to be charged in connection with antitrust violations in the generic pharmaceutical industry.  Four individuals have also been charged. Three entered guilty pleas and the fourth is awaiting trial, the DOJ noted.

The Florida-based pharmaceutical company and other generic drug companies agreed to raise and maintain the price of pravastatin, a drug commonly prescribed as cholesterol medication that lowers the risk of heart disease and stroke. 

Apotex communicated with competitors about the price increase and refrained from submitting competitive bids to customers that previously purchased pravastatin from a competing company.  

Under the deferred prosecution agreement (DPA), the company agreed to pay the multi-million-dollar criminal penalty and cooperate fully with the Antitrust Division’s ongoing criminal investigation.  

“Now, more than ever, we recognize and appreciate the importance of life-saving medications,” Makan Delrahim, assistant attorney general of the Department of Justice Antitrust Division, said in the announcement. “When the makers of those medications conspire to raise prices for profit, the most vulnerable among us suffer.  That’s why we at the Antitrust Division are committed to pursuing the prosecution of antitrust crimes by the generic pharmaceutical industry.”