Compounding the Problem

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Reimbursement rates for compounded drug prescriptions are high because a lot of work goes into combining and mixing the ingredients of a medication that is made specifically for a patient’s particular needs. These high reimbursement rates are a huge incentive for fraudsters to scam private insurers and government healthcare programs, particularly Tricare. (This government healthcare program provides health benefits for U.S. Armed Forces military personnel, military retirees, some reserve members and dependents.) Today, we learn about how a North Carolina man and his estranged wife attempted to carry out a $1.24 million healthcare fraud scheme involving compounded medications and Tricare.

The North Carolina man in today’s fraud case worked as a Staff Sergeant in the U.S. Army. He was stationed at Ft. Bragg in North Carolina, while his wife worked for a marketing firm located in Pasco County, Florida that employed representatives to market compounded medications. (These prescriptions were typically special creams intended for Tricare beneficiaries who had pain and scars.) The couple conspired to recruit Tricare beneficiaries who “needed” compounded creams marketed by the wife’s company. (Each paid claim resulted in a commission to the wife and for any other marketing representatives working for her.)

 The husband helped his wife forge prescription forms for authorized compounded creams. They used a photocopied authorized prescription form that had a doctor’s signature, name, address, NPI number and DEA number. (The doctor who authorized the prescriptions never saw the patients and had no idea their personal and professional information was being used to commit fraud.)

 The husband recruited personnel from Ft. Bragg to participate in the scheme. (Many of them were subordinate to him and were most likely coerced into the scam. Afterall, who wants to disobey the boss if he could make life difficult for anyone who didn’t want to follow suit?) In addition to the recruited personnel, the couple managed to submit fraudulent claims for their own family, including their three minor children.

The custom compounded creams ranged in price from $900 to $21,000 for a one-month supply. (The wife was motivated to increase the number of fraudulent claims because she received 15 – 30 percent of the total claim amount for each prescription.) In all, the couple aided in the submission of around $1.24 million in fraudulent claims to Tricare over six months. The government healthcare program paid more than $1 million as a result of these false claims. (Each fraudulent claim submitted just compounded their problem.)

The 34-year-old husband was sentenced to two years and eight months in prison for conspiracy to commit healthcare fraud and aggravated identity theft. His 34-year-old wife received an 18-month sentence for conspiracy to commit healthcare fraud. They also owe the government $32,747.93 for the proceeds of the healthcare fraud conspiracy.

Today’s “Fraud of the Day” is based on a Department of Justice press release,Husband and Wife Sentenced to Prison in Compounding Healthcare Fraud Scheme, released on June 21, 2019.

Tampa, Florida – U.S. District Judge Mary S. Scriven has sentenced Edward Leonard Wells, Jr. (34, North Carolina) to two years and eight months in federal prison for conspiracy to commit healthcare fraud and aggravated identity theft. On April 18, 2019, Wells’s estranged wife, Alcira Mercedes Wells (34, Connecticut), was sentenced to 18 months in federal prison for conspiracy to commit healthcare fraud.  The court also entered a money judgment of $32,747.93, the proceeds of the healthcare fraud conspiracy. Alcira Wells and Edward Wells had pleaded guilty in January 2019.

According to court documents, starting in September 2014 and continuing through February 2015, Alcira Mercedes Wells was a marketing representative for Centurion Compounding, Inc. As such, she earned and was promised commissions for each paid claim resulting from compounded creams marketed by Centurion and prescribed to a health care plan beneficiary recruited by Alcira Wells or other marketing representatives working for her.

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Larry Benson, Senior Director of Strategic Alliances, LexisNexis Risk Solutions - Government

Larry Benson is responsible for developing strategic partnerships and solutions for the government vertical. His expertise focuses on how government programs are defrauded by criminal groups, and the approaches necessary to prevent them from succeeding.

Mr. Benson has 30 years of experience in sales and business development. Before joining LexisNexis® Risk Solutions, he spent 12 years founding and managing two software technology startups. During the 1990s he spent 10 years as a Regional Director helping to grow a New England-based technology company from 300 employees to 7,000. He started his career with Martin Marietta Aerospace working on laser guided weapons and day/night vision systems.

A sought-after speaker and accomplished writer, Mr. Benson is the principal author of “Fraud of the Day,” a website dedicated to educating government officials about how criminals are defrauding government programs. He has co-authored WTF? Where’s the Fraud? How to Unmask and Stop Identity Fraud’s Drain on Our Government, and Data Personified, How Fraud is Changing the Meaning of Identity.

Benson holds a Bachelor of Science in Physics from Albright College, and earned two graduate degrees – a Master of Business Administration from Florida Institute of Technology, and a Master of Science in Engineering from Lehigh University.