Mississippi pharmacist pleads guilty in $400M-plus fraud

Published 5:17 pm Thursday, August 9, 2018

JACKSON, Miss. (AP) — A Mississippi pharmacist pleaded guilty Thursday to helping run a fraud that collected $244 million from a federal military health insurer.

Thomas E. Spell Jr., a 50-year-old Ridgeland man, waived indictment and pleaded guilty Thursday in Hattiesburg federal court to one count of attempt and conspiracy to commit health care fraud. As part of the plea, Spell admitted to personally receiving more than $29 million between December 2014 and January 2016.

Spell faces up to 10 years in prison and prosecutors want him to forfeit more than $26 million in assets. U.S. District Judge Keith Starrett is scheduled to sentence Spell on Oct. 16.

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“Thomas Spell was a leader and organizer in this far-reaching fraud and his guilty plea today is a win for all taxpayers,” said Thomas Hollman III, IRS acting special agent in charge for criminal investigation.

U.S. Attorney Mike Hurst said Spell was involved in the largest health care fraud case ever prosecuted in Mississippi, worth more than $400 million. So far, seven others have been convicted in relation to the scheme and three more are under indictment. Of the top conspirators identified in a 2016 asset seizure case, Hope Thomley is under indictment and faces a trial later this year. Two others — Wade Walters and Chad Barrett — do not yet face criminal charges, although prosecutors have objected to attempts by Walters to unfreeze assets in the separate civil case, saying a criminal investigation continues.

Prosecutors say pharmacies figured out how to hand-make medications with a list of ingredients for which insurers would pay big money, making each prescription very profitable. At the same time, prosecutors allege the pharmacists hired marketers to seek and sometimes pay off physicians, nurse practitioners, dentists and others who could prescribe the drugs, which were typically topical creams. Often, the marketers provided pre-printed prescription pads and prescribers would send in orders for patients they had never examined, prosecutors say. The marketers or pharmacies would also improperly waive or pay copayments for patients who otherwise might have refused the drugs.

“As a pharmacist who was entrusted with providing safe, effective medications, this defendant selfishly put greed and personal gain before the safety and well-being of our military members, combat veterans, and retirees, who deserve the best medications and care available,” Special Agent in Charge John F. Khin of the Defense Criminal Investigative Service said in a statement.

Spell was a co-owner of Medworx, a Ridgeland pharmacy, and was involved with three other pharmacies. Hurst said the overall investigation extends into other states including Arkansas, Tennessee, California and Connecticut.