Three indicted in insurance scam; local connection

Posted 5/8/20

Three U.S. military personnel have been indicted in connection with a fraudulent insurance scam involving the billing of a pain cream and bilking more than $65 million out of the health-care program …

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Three indicted in insurance scam; local connection

Three U.S. military personnel have been indicted in connection with a fraudulent insurance scam involving the billing of a pain cream and bilking more than $65 million out of the health-care program of the national military.
Dubbed by news media as the "creme scheme," the scam also involves two Cleveland-area physicians, who have since pleaded guilty.
According to media reports, two Marines — Jeremy Syto and Daniel Castro — and Kyle Adams, a member of the U.S. Navy; as well as Cleveland doctors Carl Lindblad and Susan Vergot, were involved in defrauding TRICARE, a military insurance program.
Syto, Castro and Adams pleaded not guilty to all charges at their first court appearance on Friday, and were each released on $25,000 bonds, media outlets reported.
The cross-country conspiracy also included a Utah pharmacy owned by Wade Walters, a Mississippi businessman, who last year was indicted and charged for his participation in the scam. 
Court records detailed the scheme in which the conspirators convinced Marines in California to sign up for thousands of medically unnecessary prescriptions for compounded skin cream. The prescriptions were billed to the military's health care provider for more than $14,000 per tube of cream.
The Marines, as well as other members of the military, were paid approximately $300 per month in kickbacks.
According to a U.S. Department of Justice press release, “Between December 2014 and May 9, 2015 — the day that TRICARE stopped reimbursing for compounded medications — doctors working at Choice MD signed 4,442 total prescriptions.  Over this time, their co-conspirators billed TRICARE $65,679,512 for these prescriptions.”
The Cleveland doctors, Lindblad and Vergot, admitted in 2018 to writing thousands of prescriptions that were not only expensive and unnecessary, but for patients they had never examined, according to a story previously published in the Cleveland Daily Banner.
The prescriptions, which were then sent to the Medicine Shoppe, which is the Utah pharmacy, and which then mailed the skin cremes to the Marines.
 TRICARE got the bill.
The scheme was masterminded at Choice MD, the walk-in clinic Lindblad and Vergot operated on Candies Creek Road in Cleveland.
The clinic, which has since been shuttered, was owned by Jimmy and Ashley Collins, who have also been indicted on conspiracy charges. Their case in ongoing.
The couple allegedly collected millions in fraudulent gains, federal prosecutors argue.
Adams, Castro and Syto, allegedly helped recruit other military members into the conspiracy during the time they were on active duty at Marine Corps Air Station Miramar in California.
“The scope of the conspiracy was breathtaking," wrote Assistant U.S. Attorney Mark Pletcher in a recent court filing. “As alleged, the Collins’ recruiting team successfully induced hundreds of patients to sign up to receive prescription compounded drugs, resulting in thousands of fraudulent prescriptions and refills, and over $65 million in reimbursements from Tricare, from which Jimmy and Ashley Collins and their team of recruiters netted millions of dollars.”
Vergot and Lindblad, as well as Tennessee nurse practitioner Candace Craven, have pleaded guilty and are awaiting sentencing. 
Two more recruiters, Josh Morgan and Bradley White, have also pleaded guilty. 
CFK Inc., the company that owned the Utah pharmacy, also pleaded guilty. Its owner,  Walters, has been indicted on allegations of a similar conspiracy based in Mississippi, according to media reports. His trial is set for July 13.
The DOJ in March also announced that five people were convicted in federal court in Chattanooga for their roles in a scheme that defrauded both private insurance companies and government insurance programs of more than $30 million, including $950,000 from Hamilton County Schools.
Jerry Wayne Wilkerson, Michael Chatfield, Kasey Nicholson, Billy Hindmon and Jayson Montgomery were convicted in the U.S. District Court for the Eastern District of Tennessee  for healthcare fraud, wire fraud, mail fraud, illegal kickbacks and money laundering.
They will be sentenced June 8.
“The four-year investigation revealed that the defendants used a network of in-person marketing by convincing friends and family members to sign up for revolving shipments of exorbitantly priced topical creams and medications, some prescribed without seeing a physician or others which were not medically necessary,” federal prosectors said. “The majority of the time, these medications were neither needed nor wanted by the named patient, but were ordered strictly for monetary gain.”  
On some occasions, prosecutors said “orders were placed without the knowledge or approval of the patient, and their insurance would then be billed for these items.” 
“The proof at trial showed that Wilkerson collected at least $13 million in commissions from the scheme,” prosecutors said. 


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