Icon (Close Menu)

Logout

Little Rock Medical Sales Rep, 3 Others Plead Guilty to Multimillion-Dollar Tricare Scheme

4 min read

A Little Rock medical sales rep and three others recently pleaded guilty in U.S. District Court in Little Rock in connection with a multimillion prescription drug kickback scheme involving the U.S. military’s health insurer. 

Brad Duke, 43, who operated Medsurg Inc. of Little Rock, waived indictment and pleaded guilty on Oct. 3 to one count of conspiracy to violate the anti-kickback statute from December 2014 to July 2015. He also agreed to forfeit $1.1 million that he gained from the crime.

Duke paid five patient recruiters more than $2 million for referring more than 100 beneficiaries of Tricare, which is the military’s health insurer, for which Tricare paid more than $10 million in prescription compounds.

“Duke’s scheme resulted in millions of dollars of fraud and waste to our taxpaying citizens,” U.S. Attorney Cody Hiland for Eastern District of Arkansas said in a news release Thursday.

Charlotte Leija, 38, of Conway, also pleaded guilty Wednesday to one count of conspiracy to violate the anti-kickback statute. She worked as a medical assistant in a Little Rock doctor’s office, which was unnamed in the court filings. As part of her plea agreement, she agreed to forfeit $253,600 she received for helping in the scheme. 

Michael “Chance” Beeman, 48, of Maumelle, and Michael Sean Brady, 50, of Little Rock, also pleaded guilty Wednesday to conspiring to violate the anti-kickback statute. Beeman and Brady will forfeit a total of $550,000 as payment for helping Duke recruit patients.

More charges in connection with the scheme are expected. 

The information sheets filed in U.S. District Court in Little Rock give a peek inside the conspiracy that involved more than $2 million paid as kickbacks and bribes for referring Tricare beneficiaries to receive compounded prescription medication issued under the name of a Little Rock doctor and produced by a compounded pharmacy in Mississippi, which isn’t named in the filings.

Tricare is run by the Department of Defense and provides health care benefits for military members and their families and retirees. 

Duke began Medsurg in August 2010, according to his Linkedin profile, but it wasn’t until more than four years later that he turned to crime, according to the information sheet.

The president and CEO of a medical sales company in Tennessee recruited Duke to sell compounded medications for the Mississippi pharmacy.

The sales executive told Duke that doing marketing for the pharmacy generated a lot of money because Tricare paid tens of thousands per month per patient for the pharmacy’s products. And making the deal even better, the pharmacy didn’t enforce copayments, meaning Tricare beneficiaries could continue to receive monthly shipments of prescriptions that Tricare would pay at no cost to Tricare members, the information sheets said. 

In December 2014, Duke visited a Little Rock doctor’s clinic to promote the Mississippi pharmacy’s product to the doctor and his staff, which included Leija, who was working as a medical assistant.

Sometime after the visit, Duke approached her with an offer. He would supply the Tricare beneficiary information and Leija would use it to issue prescriptions for the Mississippi pharmacy under the doctor’s name, the filings said. In exchange, Duke would pay her $1,000 each time the prescription went through, including $1,000 for every refill, according to the filing.

Duke’s information sheet said the doctor didn’t know Leija was filling the prescriptions. 

Duke needed Tricare beneficiaries, though. So he hired other people, including Beeman and Brady, and others who are unnamed in the information sheet, to steer Tricare beneficiaries to receive the pharmacy’s medications.

Duke promised to pay the recruiters 20 percent of whatever Tricare paid the pharmacy.

Duke told the recruiters that a Little Rock doctor would sign for the prescriptions, with automatic refills, for Tricare beneficiaries without consulting them, even if they lived outside of Arkansas.

The patient recruiters “did not provide (nor did Duke require) information a prescriber would consider in determining if the prescription was medically necessary,” the information said.

After receiving the beneficiaries’ information, Duke would then forward the information to Leija. She then entered the amount of the refills, added the doctor’s signature and faxed the prescription to the pharmacy, according to the information sheet.

More than 70 percent of the prescriptions issued in the doctor’s name were for Tricare members who lived outside Arkansas and covered states coast to coast.

After the pharmacy dispensed the drugs to the Tricare’s beneficiaries, it billed Tricare. Tricare then paid the pharmacy, which sent money to the medical sales company in Tennessee. From there, the sales company paid Duke his 35 percent share of whatever Tricare had paid.

Duke then made payments to his co-conspirators.

The filings didn’t say how the crime was exposed, but a news release on Thursday noted that Tricare paid nearly $2 billion for compound prescription drugs in 2015 — “an 18-fold increase over previous years — prompting investigations around the country.”

The charge of conspiracy to violate the anti-kickback statute carries a maximum federal prison sentence of five years and a $250,000 fine. 

Sentencing dates haven’t been set for the defendants. 

Send this to a friend