Compounders Accused of Fraud and Threatening Witnesses
Two north Texas men have been accused by federal prosecutors of using threats and intimidation to run a $100 million fraud scheme in which they got the military to pay for expensive and unneeded compound medications for soldiers.
John Paul Cooper and Richard Cesario were charged in February with conspiracy to commit health care fraud and paying and receiving illegal remuneration; both have pleaded not guilty. Their lawyers declined to comment about the case.
The allegations of threatening behavior on the part of Cooper and Cesario emerged in recently filed court documents in the federal criminal case. The two men remain in federal custody, held without bond, partly because prosecutors say they are a danger to the community.
Compounding pharmacies tailor drugs to individual patients, usually in small batches, by altering dosages, mixing medications and converting pills into liquids. They used to operate like independent neighborhood pharmacies. But in recent years, the businesses have expanded by selling drugs to physicians and hospitals, making them more akin to drug manufacturers, the Food and Drug Administration says.
In 2004, the military health care system known as Tricare spent $5 million for compounded drugs. In 2014, spending on the specialty drugs jumped to $514 million. Compound drug spending for the military has rocketed to more than $1 billion in the first four months of 2015.
Texas workers’ compensation stakeholders have repeatedly expressed concerns to the Texas Division of Workers’ Compensation over lack of effective enforcement tools to curb out of control compounders. In June 2016 a judge with the State Office of Administrative Hearings (SOAH) ruled that a compounding cream allegedly needed by an injured worker who suffered from carpal tunnel syndrome was not medically necessary and that the prescribed compound was experimental and investigational, thus requiring preauthorization under Rule 134.600. The SOAH decision was not appealed by the pharmacy and has, therefore, become final.
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