A Tennessee clinic swindled the military out of $65M. This is how it got caught

Source: Tennessean | February 9, 2019 | Brett Kelman

CATHEDRAL CITY, Calif. — Bill Schneid stood in his home office, holding a package of skin cream worth more than gold. He didn’t know exactly what he had stumbled on, but he was pretty sure it was illegal.

It was March 2015. A few weeks before, Schneid, 72, a curmudgeonly private investigator, had been snooping around Southern California military bases when a Marine he knew mentioned he had a strange source of side income.

The Marine was being paid to get medicine he didn’t need. A Tennessee doctor he had never met wrote him a medicinal cream prescription, which was being filled by a pharmacy in Utah. The military covered the bill and the Marine got a cash kickback from somebody. When the creams arrived in the mail, the Marine didn’t actually use them.

He was in it for the money, not the medicine, after all.

Suspicious, Schneid launched a ruse to investigate, persuading the Marine to reroute the shipments to his house. Soon, Schneid received a shoebox-sized parcel that held several tubes of cream about the same size and consistency as sunscreen that was supposedly used to treat pain and scars.

This medicine had been prescribed, supplied and delivered seemingly for no reason at all. Nobody needed it. Nobody wanted it. So what was the point?

“After the second delivery, I realized this was some kind of fraud,” Schneid said in an interview. “I believed there were about a dozen Marines involved, and they were being actively recruited to be prescribed this cream.

“It was a conspiracy, and it was growing, but I just didn’t know how huge.”

Today, court records make clear the enormity of the conspiracy. The scheme that Schneid stumbled upon in 2015 stretched from California to Tennessee, involving people and companies from at least four states. In Tennessee, two doctors and a nurse practitioner have pleaded guilty to defrauding a military insurance program, called Tricare, out of $65 million. At least two more suspects are still facing charges. Federal prosecutors also are attempting to seize swaths of East Tennessee farmland, a strip mall, and a large estate they argue was purchased with health care fraud profits.

Outside Tennessee, an ex-Marine in San Diego has confessed to recruiting Marines for the scheme and a Utah pharmacy company is under indictment. That company is also linked to an even larger scheme in Mississippi, where seven people have pleaded guilty to using similar medicinal creams to defraud the federal government out of an additional $400 million.

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In Tennessee, the crux of the cream conspiracy was Choice MD, a small, now-shuttered clinic in Cleveland, a manufacturing town near the Georgia border.

A Choice MD nurse practitioner, Candace Michelle Craven, has admitted she conducted fake telemedicine evaluations with Marines in California so that two Choice MD doctors, Susan Vergot and Carl Lindblad, could write nearly 4,500 cream prescriptions to Marines they had never met or diagnosed.

Each prescription cost about $14,500. American taxpayers covered the cost.

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