No Honor Among Fraudsters

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Pills spilling out of a prescription bottle on 100 dollar paper currency

Two Tennessee doctors were recently sentenced for their roles in a conspiracy to defraud Tricare out of tens of millions of dollars. (Tricare is a government health insurance program that offers affordable healthcare to members of the military and their dependents.) Dr. Susan Vergot and Dr. Carl Linblad admitted to prescribing compounded prescriptions to patients they never saw, nor examined. (I’m not a doctor, but I think they’re missing a few important steps in the prescription process.)

Compounded medications are expensive specialty medications prescribed by physicians when generic medications do not work. The prescriptions are mixed by pharmacists and are normally prescribed if a patient has a specific medical need or allergy. They are normally prescribed as a last resort due to the exorbitant cost. (Compounded medication can cost upwards of a thousand dollars.)

Dr. Vergot and Dr. Lindblad were part of a group of conspirators that recruited Tricare beneficiaries primarily in the San Diego area to perpetrate the scam. The doctors had recruiters pay Marines and their dependents to request medically unnecessary compounded medications so that the doctors could fraudulently bill Tricare and receive higher reimbursements. The prescriptions were sent to pharmacies controlled by the co-conspirators like The Medicine Shoppe in Utah. The medication was mailed back to the Tricare beneficiaries in California. (It’s amazing how far fraudsters will go to carry out their schemes. If only they put that much work into their day jobs.)  

Between Dr. Vergot and Dr. Lindblad, 6,694 prescriptions for compounded medications were authorized between November 2014 and June 2015. During this time, the doctors and their conspirators fraudulently billed Tricare for $89,725,000. Most of these billings were for prescriptions written for the beneficiaries they had paid to request compounded medications.

Losses to Tricare totalled $65 million. (This means about two thirds of their billings were bogus.) Dr. Vergot and Dr. Lindblad are the most recent defendants to be sentenced for their roles in this billing conspiracy. The corporate owner of the Utah-based pharmacy was previously sentenced for their participation in the ruse. Additionally, a nurse practitioner and the patient recruiters have pleaded guilty to healthcare fraud and await sentencing.

Dr.Vergot was sentenced to two years in custody and Dr. Lindblad was sentenced to 28 months. Both were also ordered to each pay a $15,000 fine. Their time in custody will be split between a California prison and home confinement. (You’d think defrauding the government out of tens of millions of dollars would result in a few more years of incarceration and the loss of their medical licenses.)  

Agencies rely on the public’s help to root out fraud and bring those responsible to justice. If you suspect someone of committing Tricare fraud you can submit a report to the Defense Health Agency’s Program Integrity Office through their online complaint form.

Today’s Fraud of the Day comes from a Department of Justice press release, “Tennessee Doctors Sentenced in $65 Million TRICARE Fraud,” dated September 18, 2020.

SAN DIEGO – Two doctors, Susan Vergot and Carl Lindblad, were sentenced in federal court today for participating in a health care fraud scheme that bilked TRICARE – the health care program that covers United States service members – out of tens of millions of dollars by prescribing thousands of exorbitantly expensive compounded drugs to patients they never saw or examined.

Dr. Vergot and Dr. Lindblad were sentenced to 24 and 28 months in custody, respectively, by U.S. District Judge Janis L. Sammartino. The custodial portion of each defendant’s sentence will be split between prison and home confinement. Each was also sentenced to pay a $15,000 fine.

 

 

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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.