Leader of $17 Million Health Insurance Fraud Scheme Ordered to Prison

HOUSTON – A 50-year-old Fulshear woman has been sentenced to federal prison for her role as a leader and organizer in a scheme involving the billing of insurance companies for creams containing Ketamine without valid prescriptions, announced Acting U.S. Attorney Abe Martinez. A federal jury convicted Tamara Mitchell Nov. 9, 2016, following a three-day trial.

“The public expects that the prescription drugs they receive are pursuant to valid prescriptions that are based on a legitimate medical need,” said Special Agent in Charge Spencer E. Morrison of the Food and Drug Administration - Office of Criminal Investigation, (FDA-OCI) Kansas City Field Office. “Our office will continue to pursue and to bring to justices those who jeopardize the public health by engaging in fraudulent schemes to dispense prescription drugs.”

Today, U.S. District Judge Nancy Atlas ordered Mitchell to prison for a total of 14 years to be immediately followed by three years of supervised release. At the hearing, the court heard additional evidence that one of the individuals who received the creams died from Ketamine and Cyclobenzaprine toxicity. Both substances were active ingredients in the creams Mitchell sold. In handing down the sentence, Judge Atlas noted the vast nature of the fraud scheme was one of the worst she had seen in 22 years on the bench.

During trial, the jury heard evidence demonstrating Mitchell was an owner of two pharmacies, Diamond and Save Rite, that sold creams containing controlled substances as part of a marketing scheme rather than for legitimate medical need. Both pharmacies sold these compounded creams containing Ketamine to the public by using pre-signed prescriptions to fill orders for customers who had the “right” insurance plans. The individuals who received the creams were never examined by a doctor and the submissions to the insurance providers contained misrepresentations regarding the medical need.

Mitchell hired a pharmacy technician and pharmacist to conduct the day-to-day operations of the business, while another pharmacist marketed the creams to anyone with an insurance plan that would pay. Diamond Pharmacy paid a physician and nurse practitioner thousands of dollars per month to pre-sign prescription pads without examining patients. Under Mitchell’s direction, Diamond and Save Rite falsely billed insurance companies for more than $17 million in just two years.

Mitchell will remain in custody pending transfer to a U.S. Bureau of Prisons facility to be determined in the near future.

The FDA-OCI and Drug Enforcement Administration conducted the investigation. Assistant U.S. Attorney James McAlister is prosecuting the case.