LITTLE ROCK – A co-defendant of a former Baxter County basketball coach admitted in federal court Wednesday that in 2015 he participated in a scheme to defraud Tricare, the federal government’s health insurance program, of more than $12 million.Albert Glenn Hudson of Little Rock, who did business as Major Healing, pleaded guilty to a single charge of conspiring to defraud the federal government.
The Arkansas Democrat-Gazette reports Hudson agreed he pocketed $1.5 million by organizing a network of people to submit phony prescriptions for expensive compounded medications to a Mississippi pharmacy. The pharmacy then paid a marketer for whom he worked a portion of the insurer’s reimbursements for each prescription.
In January, a federal grand jury in Little Rock indicted Derek Clifton of Little Rock, a former Norfork School District basketball coach who became a medical sales representative, and Dr. Joe David May of Alexander, who is known as Jay May. They were accused of participating in the conspiracy and obstructing a related FBI investigation. Both have pleaded innocent. Clifton was with Norfork schools from 2006-2009.
Hudson wasn’t named in the indictment, but he pleaded guilty Wednesday to an information — a charging document that bypasses a grand jury review– admitting his involvement.
He started to plead guilty on May 29, but Chief U.S. District Judge D. Price Marshall Jr. cut the hearing short, and it resumed Wednesday.
The 31-page charging document alleges Hudson, Clifton and May, along with others who aren’t named, conspired to pay and receive kickbacks to generate fraudulent prescriptions for pain creams, scar creams, supplements and other medications that were signed without the patient being examined first and without regard for medical necessity. It says the conspirators concealed the truth from the pharmacy, Tricare and law enforcement officials.
But, “unbeknownst to Tricare, kickbacks were often paid at every level: to beneficiaries to get the drugs, to recruiters to find beneficiaries, and to medical professionals to rubber stamp prescriptions.”
Tricare covered prescription drugs, including some compounded drugs, and processed and paid them along with Express Scripts Inc., a pharmacy benefit manager, in good-faith reliance on claims that the drugs were dispensed pursuant to valid prescriptions, the document states.
It said, “in other words, Tricare and Express Scripts would not have paid for prescription drugs had they known drugs had not been issued pursuant to valid prescriptions,” which are those signed by licensed medical professionals after examining patients and determining the drugs are necessary to treat the patient’s condition.
The insurance program and its benefits manager also processed and paid the claims “in good-faith reliance on the fact that kickbacks had not been offered, paid, solicited, or received in the course of generating the prescriptions,” it said.
The Mississippi pharmacy is identified only as “Pharmacy 1” in court documents. It shipped its compounded drugs to patients across the country.
The information says an unnamed marketer in Tennessee promoted the pharmacy’s compounded drugs through various promoters across the country, including Hudson. It says Hudson paid at least five recruiters to find Tricare beneficiaries to receive the drugs, and paid others, including Clifton, to get medical professionals, including May, to rubber-stamp the prescriptions.
A registered nurse practitioner in Arkansas, who isn’t named, rubber-stamped prescriptions from Hudson in exchange for $1,000 payments to her daughter for each patient, the document states. It said Hudson then struck a similar deal with a medical doctor licensed in Arkansas, who also isn’t named.
The charging document alleges that Hudson gave pre-printed prescription forms to his recruiters, telling them that Tricare beneficiaries could select whatever drugs they liked, but also advising his recruiters to “push the most expensive drugs.”
It alleges other recruiters that worked through Clifton, at Hudson’s direction, were given a script to try to persuade Tricare beneficiaries to agree to receive prescriptions at no cost to themselves.
If the beneficiaries responded by saying, “why do I need pain cream? I don’t suffer from chronic pain,” the script told the recruits to say, “It also works for minor aches and pains associated with everyday life… You should get it since it will be at no cost, and you can also give it to a family member that might not have as favorable coverage as you do.”
“Things ran like an assembly line: recruiters sent Tricare beneficiaries to Hudson, who routed them to prescribers in the form of pre-filled prescriptions to be rubber-stamped,” the information states.
The Democrat-Gazette reports in court Wednesday, Assistant U.S. Attorney Alex Morgan said Hudson’s plea agreement calls for him to forfeit the amount of money he retained through the scheme — $1,523,335.61 — and calls for him to be sentenced based on the same amount of money.
But defense attorney Charles Hicks of Little Rock argued that because Hudson paid income taxes on the money he obtained through the scheme, the amount of taxes he paid on that money should be deducted from the amount of restitution he will owe. Otherwise, Hicks said, the government would be receiving the money twice — once in the form of income taxes and once in the form of restitution.
Hicks also contends Hudson should be sentenced under a lower penalty range in federal sentencing guidelines than the penalty range for more than $1.5 million in fraud, because he actually netted less than that amount.
Morgan disagrees, saying Hudson and Hicks signed the agreement that uses the $1.5 million figure for sentencing purposes and restitution purposes, and, “we’re not going to re-litigate the proper guideline calculation.”
Marshall said he looks forward to the arguments that will be presented at Hudson’s sentencing hearing at 10 a.m. March 15, 2021 — about two months after the trial of his co-defendants.
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