Twenty-Four Charged in Arkansas as Part of Largest Nationwide Health Care Fraud Enforcement Action in Department of Justice History

WASHINGTON—Attorney General Jeff Sessions and Department of Health and Human Services (HHS) Secretary Tom Price, M.D., announced today the largest ever health care fraud enforcement action by the Medicare Fraud Strike Force, involving 412 charged defendants across 41 federal districts—including the Eastern District of Arkansas. Among the defendants were 115 doctors, nurses and other licensed medical professionals, all alleged to have participated in health care fraud schemes involving approximately $1.3 billion in false billings. Of those charged, over 120 defendants, including doctors, were charged for their roles in prescribing and distributing opioids and other dangerous narcotics. Thirty state Medicaid Fraud Control Units also participated in today’s arrests. In addition, HHS has initiated suspension actions against 295 providers, including doctors, nurses and pharmacists.

In Arkansas, Patrick C. Harris, Acting United States Attorney for the Eastern District of Arkansas and Stephen G. Azzam, Special Agent in Charge of the Drug Enforcement Administration’s (DEA) New Orleans Field Division, who oversees the DEAs’ Little Rock District Office, announced the unsealing of three indictments charging 24 defendants in schemes intended to divert pharmaceutical pills to the streets.

“The abuse of prescription medication, particularly opioids, is one of the largest health and crime problems Arkansas is facing,” Harris said. “This epidemic must be attacked on multiple fronts—by stopping the criminal doctors and medical professionals from writing medically unnecessary prescriptions, and by preventing the common drug dealers from diverting these pills to the hands of other addicts and dealers, either by writing fraudulent prescriptions or stealing dangerous drugs from pharmacies. The defendants in the cases announced by my office today illegally put hundreds of thousands of pills on the streets, and they must be stopped. The Eastern District of Arkansas joins the Justice Department’s resolve to aggressively pursue and prosecute all manner of health care and prescription pill crime.”

In the first Arkansas case, 4:16-cr-00278-KGB, charges stem from an early-morning burglary on February 25, 2016, of the Health-Way pharmacy in Beebe. On December 7, 2016, the four suspects in the burglary, Albert Ray Ferguson, Jr., Thristian Davante Duplechin, Corry Wayne Cornett, and Cory Jermaine Lewis, all from Houston, Texas, were charged with conspiracy to break in a business premises registered with the DEA to dispense controlled substances.

Following the arrest of the initial four defendants, an ongoing investigation by the DEA Tactical Diversion Squad uncovered a network of individuals who were traveling between states to commit pharmacy burglaries. During the investigation, the DEA canvased law enforcement agencies from nearby states for similar pharmacy burglaries, and developed evidence linking eight additional defendants to the defendants from Beebe. Physical and electronic evidence from numerous burglaries in several states, including Arkansas, Nebraska, Indiana, Illinois, Iowa, Kentucky, Virginia, and Texas, showed that the individuals involved were members of local street gangs in the Houston area.

These gangs stole more than 120,000 Schedule II pills during these burglaries, with a street value of at least $1,050,000. On July 6, 2017, a superseding indictment was returned in the Eastern District of Arkansas adding an additional count charging the other gang members with conspiracy to possess with intent to distribute Schedule II, III and IV controlled substances.

In case 4:17-cr-176-BSM, a federal Grand Jury charged Erik Edson Turner and two others with conspiracy to possess with intent to distribute Schedule II controlled substances without an effective prescription. Beginning in 2015, Turner fabricated prescriptions to fraudulently obtain oxycodone 30 mg tablets from pharmacies. Turner sold some of the oxycodone to Spencer Daniel King, who eventually joined Turner in the conspiracy to obtain the drug by using fraudulent prescriptions. In 2016, Michael Joseph “Joey” Carbonero was recruited by Turner to assist in the scheme. Over the course of two years, Turner and individuals working on his behalf obtained thousands of oxycodone pills with a street value in excess of $150,000. These cases are being prosecuted by Assistant United States Attorney Anne E. Gardner.

In the third case, 4:17-cr-00184 BSM, the DEA Tactical Diversion squad uncovered a sophisticated prescription-forgery operation headed by Michael McClellan, 32, of North Little Rock. In this scheme, McClellan created fraudulent prescriptions using computer templates that either McClellan or other individuals then filled at local pharmacies.

The investigation into McClellan’s operation began following a break-in at McClellan’s home. When police arrived, they discovered numerous pieces of drug paraphernalia and other indicators of illegal activity. The DEA obtained a search warrant for the computers in McClellan’s home, and an analysis of these computers revealed the extent of the operation.

Agents also located drug ledgers in McClellan’s home that, coupled with the information from the computers, revealed the names of nearly 100 people whose identification was used to obtain fraudulent prescriptions. All told, since the conspiracy began in 2012, more than 74,000 pills were obtained from these forged prescriptions. McClellan and the eight other main individuals in the organization are charged with conspiracy to possession with intent to distribute Schedule II controlled substances. This cases is being prosecuted by Assistant United States Attorney Chris Givens.

“The diversion and abuse of prescription drugs pose a significant threat to the health and safety of our communities across the nation, including here in Arkansas,” Special Agent in Charge Azzam said. “Today, more people die from opioid-related causes than from gun homicides. This unprecedented collaboration between all law enforcement agencies represented in this region exemplifies the continuing unified goal of keeping our neighborhoods safe and secure. The indictment of these individuals will undoubtedly convey a strong and unified message to those criminals who continue to engage in activities, such as these pharmacy burglaries, threatening the safety of our citizens.”

Nationwide, today’s enforcement actions were led and coordinated by the Criminal Division, Fraud Section’s Health Care Fraud Unit in conjunction with its Medicare Fraud Strike Force (MFSF) partners, a partnership between the Criminal Division, U.S. Attorney’s Offices, the FBI and HHS-OIG. In addition, the operation includes the participation of the DEA, DCIS, and State Medicaid Fraud Control Units.

The charges announced today aggressively target schemes billing Medicare, Medicaid, and TRICARE (a health insurance program for members and veterans of the armed forces and their families) for medically unnecessary prescription drugs and compounded medications that often were never even purchased and/or distributed to beneficiaries. The charges also involve individuals contributing to the opioid epidemic, with a particular focus on medical professionals involved in the unlawful distribution of opioids and other prescription narcotics, a particular focus for the Department. According to the CDC, approximately 91 Americans die every day of an opioid related overdose.

“Too many trusted medical professionals like doctors, nurses, and pharmacists have chosen to violate their oaths and put greed ahead of their patients,” Attorney General Sessions said. “Amazingly, some have made their practices into multimillion dollar criminal enterprises. They seem oblivious to the disastrous consequences of their greed. Their actions not only enrich themselves often at the expense of taxpayers but also feed addictions and cause addictions to start. The consequences are real: emergency rooms, jail cells, futures lost, and graveyards. While today is a historic day, the Department's work is not finished. In fact, it is just beginning. We will continue to find, arrest, prosecute, convict, and incarcerate fraudsters and drug dealers wherever they are.”

“Healthcare fraud is not only a criminal act that costs billions of taxpayer dollars - it is an affront to all Americans who rely on our national healthcare programs for access to critical healthcare services and a violation of trust,” Secretary Price said. “The United States is home to the world’s best medical professionals, but their ability to provide affordable, high-quality care to their patients is jeopardized every time a criminal commits healthcare fraud. That is why this Administration is committed to bringing these criminals to justice, as President Trump demonstrated in his 2017 budget request calling for a new $70 million investment in the Health Care Fraud and Abuse Control Program. The historic results of this year’s national takedown represent significant progress toward protecting the integrity and sustainability of Medicare and Medicaid, which we will continue to build upon in the years to come.”

According to court documents, the defendants allegedly participated in schemes to submit claims to Medicare, Medicaid and TRICARE for treatments that were medically unnecessary and often never provided. In many cases, patient recruiters, beneficiaries and other co-conspirators were allegedly paid cash kickbacks in return for supplying beneficiary information to providers, so that the providers could then submit fraudulent bills to Medicare for services that were medically unnecessary or never performed.

The number of medical professionals charged is particularly significant, because virtually every health care fraud scheme requires a corrupt medical professional to be involved in order for Medicare or Medicaid to pay the fraudulent claims. Aggressively pursuing corrupt medical professionals not only has a deterrent effect on other medical professionals, but also ensures that their licenses can no longer be used to bilk the system.

The Medicare Fraud Strike Force operations are part of a joint initiative between the Department of Justice and HHS to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country. The Medicare Fraud Strike Force operates in nine locations nationwide. Since its inception in March 2007, the Medicare Fraud Strike Force has charged over 3500 defendants who collectively have falsely billed the Medicare program for over $12.5 billion.

A complaint, information, or indictment is merely an allegation, and all defendants are presumed innocent unless and until proven guilty.

Additional documents related to this announcement are available here: https://www.justice.gov/opa/documents-and-resources-july-13-2017.