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  • Writer's pictureSean Buckley


Updated: Apr 25, 2022

Defending Clients Against Indictments Involving TRICARE Reimbursements for Compounded Pain Creams, Scar Creams, and Vitamin Creams.

Federal prosecutors across the country continue to file criminal indictments against defendants accused of defrauding the U.S. military’s TRICARE health insurance program. These indictments typically accuse doctors, compounding pharmacy owners, marketers, and others of unlawfully prescribing, compounding, and marketing compounded pain creams, scar creams, and vitamin creams to TRICARE beneficiaries. The vast majority — if not all — of these cases also allege violations of the federal Anti-Kickback Statute (AKS). Contrary to what many lawyers and defendants initially assume, some of these cases can be successfully defended at trial under the right facts and circumstances.

I’m fortunate to be among the small group of lawyers nationwide who’ve beat the federal government in a TRICARE federal criminal fraud trial involving compounded creams. My client, who was acquitted on all counts in the indictment, was a compounding pharmacy owner accused in a $120M fraud against TRICARE that involved pain creams, scar creams, and vitamin creams (Case no. 3:16-cr-60(7), N.D.Tex.). As a result of my trial experience in that case and others, I’ve gained some unique insight into how and when to fight the government. The information I’ve gained in assessing the strengths and weaknesses of these prosecutions informs my ongoing work defending clients in federal TRICARE compounding cases. Here are a few key themes I can pass along:

1. Not all prohibited kickbacks are federal crimes. To get a conviction for violating the AKS, federal prosecutors must prove that a defendant knew it was wrong to pay or receive a kickback (the “willfully” element). This element can be harder to prove than many prosecutors assume.

2. TRICARE and its contractor Express Scripts arbitrarily set reimbursement rates for pain cream ingredients without regard to the Average Wholesale Price (AWP) or the actual cost of the ingredients. As a result, huge disparities between cost and reimbursement rates create natural incentives to prescribe, compound, and market pain creams that have hugely profitable reimbursement rates. I firmly argue that seizing on opportunities to profit from TRICARE and ESI’s incompetence in setting reimbursement rates is not a crime in a free society. It’s shameful that the federal government’s solution for recouping money wasted by TRICARE and ESI is to prosecute health care professionals and businesspeople, send them to prison, and steal back their legitimate profits.

3. TRICARE’s contractor Express Scripts (ESI) earns a commission for each claim it pays on behalf of TRICARE. Instead of notifying doctors, compounding pharmacy owners, marketers, and others that compounded cream reimbursement rates or patterns are potentially problematic, ESI blindly overrides coverage limits, adjudicates claims, and pays those claims in full to the tune of millions of dollars before ever raising red flags. Again, the federal government totally ignores ESI’s incompetence and its conflict-of-interest when deciding whether to prosecute others.

4. Not all federal TRICARE compounding cases should be taken to trial. Many times, federal prosecutors indeed have sufficient evidence to prove some or all of the counts in an indictment. At the same time, however, federal prosecutors occasionally overreach and indict people who never should have been indicted — or add in more serious allegations that aren’t appropriate. In such cases, defendants may be wise to proceed to trial and fight back.

For over two decades, Houston criminal defense attorney Sean Buckley has successfully defended white-collar criminal cases including winning a stunning "Not Guilty" verdict in a $120 million federal healthcare fraud conspiracy and money laundering trial, obtaining dismissals of charges in state and federal white-collar cases, and diffusing state and federal white-collar federal criminal investigations before criminal charges were ever filed. He is the lead editor of the nationally-respected O'Connor's Federal Criminal Rules & Codes (Thomson Reuters, 2010-20). Contact us today to set up a Free Case Evaluation!

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