Texas Doctor Accused of False Claims Act Violations

The United States Attorney’s Office for the Northern District of Texas has filed a False Claims Act lawsuit against a Texas dermatopathologist and his clinic, Cockerell Dermatopathology (CDP), for submitting nearly $4.2 million in fraudulent claims to TRICARE, announced Acting U.S. Attorney Prerak Shah.

According to allegations in a civil complaint filed Monday, Dr. Clay Cockerell, 64, knowingly permitted a laboratory management company to use his clinic’s lab license to submit false claims to federal health insurance programs, including TRICARE, for medically unnecessary tests. 

The complaint alleges that in March 2015, Dr. Cockerell signed an agreement that authorized the management company, Progen, to use CDP’s CLIA lab license to submit claims for payment for toxicology and pharmacogenomic tests.  In return, Progen agreed to pay CDP twenty percent of the net revenue from those tests. 

In an attempt to avoid the reach of the federal Anti-Kickback Statue (AKS), Dr. Cockerell specified that CDP would not provide any testing services to beneficiaries of federal health insurance programs, such as TRICARE, Medicare, or Medicaid, or collect any federal revenue. 

According to the complaint, Dr. Cockerell quickly became aware that Progen was violating their agreement and submitting claims to federal healthcare programs. He also learned that Progen was engaged in gross mismanagement and abusive practices, and even received warnings that CDP was violating the False Claims Act. 

Meanwhile, Progen marketers were offering $50 Wal-Mart gift cards to induce TRICARE beneficiaries to provide urine and saliva for expensive, medically unnecessary testing. 

Despite these and other red flags, the complaint alleges that Dr. Cockerell continued to permit Progen, using CDP’s license, to submit fraudulent claims to TRICARE. 

The complaint also alleges that, after multiple patient complaints, CDP sent TRICARE a retraction letter in January 2016, admitting to receiving over $900,000 for improper claims.  Despite this, Dr. Cockerell continued to let Progen submit lab claims to TRICARE using his CLIA license. 

In June 2016, a CBS News story aired about the Wal-Mart gift card scheme.  Shortly thereafter, CDP sent another retraction letter to TRICARE and admitted receiving an additional $3.2 million for false claims.  While CDP stated that it would refund TRICARE for all of these erroneous claims, it never did.

In November 2016, as CDP was under federal investigation, Dr. Cockerell terminated his relationship with Progen.  CDP later filed an arbitration claim against Progen and its principals, seeking indemnification for the millions of dollars it allegedly intended to repay to TRICARE.  As described in the government’s complaint, Progen settled this litigation in March 2019 for $3.485 million.  In a memorandum explaining the purpose of the settlement payment, Dr. Cockerell and CDP represented that they would use the settlement proceeds to repay TRICARE.  But they never did.   

The government is now seeking to recover the millions in TRICARE payments that CDP previously admitted were improper, or, at a minimum, the $3.485 million that CDP and Dr. Cockerell agreed that they would pay to TRICARE.  The False Claims Act allows for treble damages and statutory civil penalties. 

The claims against Dr. Cockerell and CDP are merely allegations until they are proven in court. 

The Defense Criminal Investigative Service conducted the investigation.  Assistant U.S. Attorney Richard Guiltinan is handling the civil case, which is assigned to U.S. District Judge Jane J. Boyle.