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Five Convicted in $30M Healthcare Cream Fraud Scheme
Chattanooga, Tenn. – Jerry Wayne Wilkerson, 40, Michael Chatfield, 31, Kasey Nicholson, 34, Billy Hindmon, 39, and Jayson Montgomery, 40, have been convicted in federal court for their roles in a scheme defrauding private insurance companies and government insurance programs of over $30 million dollars.
The scheme involved sham prescriptions for compounded creams and medications, oftentimes issued without the supposed patient even knowing about them, and were frequently signed by a health care provider who never even met the patient.
The charges of healthcare fraud, wire fraud, mail fraud, illegal kickbacks, and money laundering in the 178-count indictment centered on a scheme in which the defendants marketed topical creams and other medications through prescription drug coverage plans that paid for the creams and medications.
The creams were compounded by a pharmacy, meaning they were supposed to have been uniquely formulated specifically for the needs of an individual patient, thus justifying the exorbitant cost- sometimes more than $15,000 per tube. However, the proof at trial showed there was nothing unique about these creams, and in fact the prescription forms were usually pre-printed documents filled out in mass by the marketers.
A health care provider’s signature was oftentimes stamped on the document by employees of the defendants. The defendants all profited from the fraud, including the pocketing of millions of dollars of kickbacks from prescriptions billed to Tricare, which is the government-funded health insurance program for active duty and retired military servicemen and women.
The four-year investigation revealed that the defendants used a network of in-person marketing by convincing friends and family members to sign up for revolving shipments of exorbitantly priced topical creams and medications, some prescribed without seeing a physician or others which were not medically necessary.
Insurance companies and Tricare paid a total of roughly $35 million for the compounded medications in this case.
Key Facts
- State: Tennessee
- Category: Drug Trafficking|Fraud & Financial Crimes|Violent Crime|
- Source: DOJ Press Release â†â€â€
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