U.S. Sues Patient Care America, Execs Over $TensM TRICARE Fraud

The federal government has launched a hard-hitting civil assault against Diabetic Care Rx LLC d/b/a Patient Care America (PCA), a Pompano Beach, Florida-based compounding pharmacy, accusing it of running a brazen kickback scheme that bled TRICARE for tens of millions of dollars. At the center of the storm: compounded pain creams, scar treatments, and vitamins pushed to military beneficiaries with zero regard for medical need — only profit.

Patrick Smith and Matthew Smith, top executives at PCA, stand accused alongside Riordan, Lewis & Haden Inc. (RLH), the Los Angeles private equity firm that manages both the pharmacy and the fund that owns it. The Justice Department alleges the defendants funneled illegal kickbacks through marketing companies to generate massive reimbursements from TRICARE, the federally funded health program for active-duty troops, veterans, and their families. Prescriptions were manufactured not in clinics, but in boardrooms — driven by greed, not care.

Telemedicine doctors were paid to rubber-stamp prescriptions without ever laying eyes on patients. Formulas were rigged to maximize payouts. In some cases, patients themselves were paid to accept creams and supplements they didn’t need. The complaint lays bare a criminal assembly line: market, prescribe, bill, split profits. All while TRICARE — and by extension, U.S. taxpayers — footed the bill.

“Kickback schemes corrupt the health care system and damage the public trust,” warned Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “We’re coming after every player — from pharmacies to private equity firms — who turn taxpayer-funded programs into piggy banks.” The message is clear: no shell company, no management layer, no financial facade will shield those who exploit military families for profit.

The Southern District of Florida isn’t backing down. “Providers that put profits over patients drive up health care costs and betray the public,” said Executive Assistant U.S. Attorney Randy Hummel. “We will hold pharmacies — and the firms that control them — accountable.” The Defense Criminal Investigative Service (DCIS) echoed the stance, with Special Agent in Charge John F. Khin vowing to “preserve and recover precious taxpayer dollars” meant for warfighters and their families.

The case, United States ex rel. Medrano and Lopez v. Diabetic Care Rx, LLC dba Patient Care America, et al., No. 15-CV-62617 (S.D. Fla.), was originally blown open by two former PCA employees, Marisela Medrano and Ada Lopez, who filed under the False Claims Act’s qui tam provisions. The U.S. has now intervened, signaling a full-throated prosecution. The investigation was led by the DOJ’s Civil Division, the U.S. Attorney’s Office for the Southern District of Florida, DCIS, FDA’s Office of Criminal Investigations, and the Army’s Major Procurement Fraud Unit — a federal posse closing in on health care corruption.

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