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Insurance Fraud Scheme of Epic Proportion

TRICARE is the health care program that covers United States military service members. The insurance fraud, the equivalent of a high stakes "bank robbery," swindled the U.S. Government program out of more than $65 million. The scheme involved prescribing thousands of extraordinarily expensive compound medications to military patients. Interestingly, none of the patients were neither seen, nor examined.

"Compounded medications are specialty medications mixed by a pharmacist to meet the specific medical needs of an individual patient. Although compounded drugs are not approved by the Food and Drug Administration (FDA), they are properly prescribed when a physician determines that an FDA-approved medication does not meet the health needs of a particular patient, such as if a patient requires a particular dosage or application or is allergic to a dye or other ingredient"

Insurance Fraud Ecosystem

The fraud scheme involved a team of individuals that focused on recruiting and exploiting U.S. Marines (and their dependents), mainly from the San Diego, CA area. All of the individuals recruited were TRICARE beneficiaries. The team's goal was to convince the beneficiaries that they required compounded medications. After doing so, the information was forwarded to Choice MD, a medical clinic in Tennessee, where Drs. Lindblad and Vergot practiced medicine. Despite never examining the patients in person, Drs. Lindblad and Vergot proceeded to write bogus prescriptions for the TRICARE beneficiaries.

Once authenticated, Drs. Lindblad and Vergot wrote the prescriptions and forwarded them on to their designated co-conspirator pharmacies.

"Between December 2014 and May 9, 2015 – the day that TRICARE stopped reimbursing for compounded medications – Drs. Lindblad and Vergot authorized 4,442 total prescriptions. Over this time, their co-conspirators billed TRICARE $65,679,512 for these prescriptions."

Guilty Pleas

On April 11, 2018, Dr. Carl Lindblad and Dr. Susan Vergot, both from Cleveland, TN, plead guilty in federal court, admitting their participation in the health care fraud scheme. Both plead guilty to conspiracy to commit health care fraud, and they are scheduled for sentencing in late June, 2018.

Josh Morgan, a former U.S. Marine from San Diego, CA, plead guilty to Conspiracy to Commit Health Care Fraud. The plea was for his role in recruiting and perpetuating the TRICARE fraud scheme.

Finally, Jim and Ashley Collins, the owners of Choice MD, along with CFK, Inc., the owner of a co-conspirator pharmacy, were indicted in March 2018 on charges of Conspiracy to Commit Health Care Fraud and Illegal Payments of Remunerations.