Doctor Charged in Compounding Pharmacy Fraud Scheme

From:  News Release   10/20/17   GCN

Hattiesburg, Miss – A Biloxi-based physician was charged today for his role in a multi-million dollar scheme to defraud TRICARE, the health care benefit program serving our nation’s military, veterans, and their respective family members.

U.S. Attorney Mike Hurst, FBI Special Agent in Charge Christopher Freeze, and IRS-Criminal Investigation Special Agent in Charge Jerome McDuffie made the announcement.

Albert Diaz, M.D., of Ocean Springs, Mississippi, was charged today in a sixteen-count indictment in the Southern District of Mississippi, and is scheduled to make his initial appearance before U.S. Magistrate Judge John Gargiulo on October 31, 2017, at 2:30 p.m. The indictment charges Diaz with one count of conspiracy to commit health care fraud and wire fraud; four counts of wire fraud; one count of conspiracy to distribute and dispense a controlled substance; four counts of distributing and dispensing of a controlled substance; one count of conspiracy to falsify records in a federal investigation; and, five counts of falsification of records in a federal investigation.

The indictment alleges that Diaz participated in a scheme to defraud TRICARE by prescribing medically unnecessary compounded medications, some of which included Ketamine, a controlled substance, to individuals without first examining the individuals for the purpose of having a Hattiesburg-based compounding pharmacy dispense these medically unnecessary compounded medications, and to have TRICARE reimburse the compounding pharmacy for dispensing the medications. According to the indictment, between October 2014 and December 2015, TRICARE reimbursed the pharmacy more than $2.3 million for the medications prescribed by Diaz. Additionally, the indictment alleges that in response to an audit conducted by TRICARE of these prescriptions signed by Diaz, Diaz submitted falsified patient records indicating that he had examined these individuals prior to prescribing these compounded medications.

This indictment has been designated as a related prosecution to two cases charged earlier this year in the Southern District of Mississippi. Jason May, the pharmacist-in-charge of Advantage Pharmacy, pled guilty on July 25, 2017, to conspiracy to commit health care fraud and money laundering regarding a scheme to defraud health care benefit programs, including TRICARE, of more than $190 million. Gerald Schaar, a marketer, pled guilty on July 25, 2017, to conspiracy to commit health care fraud regarding a scheme to defraud TRICARE of more than $2.3 million.

If convicted of all counts, Diaz faces 305 years in jail and fines up to $7.5 million.

The case is being handled by the United States Attorney’s Office for the Southern District of Mississippi and the Fraud Section of the Criminal Division of the United States Department of Justice. The case is being investigated by the Federal Bureau of Investigation, Internal Revenue
Service Criminal Investigations, Department of Defense Criminal Investigative Service, and other government agencies.

The public is reminded that an indictment is merely an allegation and should not be considered as evidence of guilt. The defendant is presumed innocent until proven guilty in a court of law.