Beach allegedly part of $200M health care scheme
A former Columbia resident is among four people arrested this week in a more than $200 million compounding pharmacy fraud investigation.
Advantage Pharmacy co-owner Doyle Beach, 45, pleaded not guilty in U.S. District Court in Hattiesburg Monday to 16 felony counts of conspiracy, healthcare fraud, payment to non-licensed physician, money laundering and racketeering.
Magistrate Judge Mike Parker released Beach on a $250,000 unsecured bond. Prosecutors asked for a $1 million bond secured with $100,000, but the judge said funds the government has already seized from Beach, estimated to be as high as $5 million, are sufficient but did set a condition that he cannot fly on any aircraft or leave the Southern District of Mississippi.
Also indicted were Hope Thomley, former CEO of the Southeast MS Rural Health Initiative who later owned a marketing company that helped sell compounded medications, and her husband, Randy. The Hattiesburg couple also owns Thomley Christmas Tree Farm. Nurse practitioner Gregory Parker of Laurel was indicted as well.
The case relates back to when the FBI raided compounding pharmacies, which mix drugs to create custom prescriptions, and other properties throughout Mississippi and other states in January 2016. Investigators seized millions of dollars in bank accounts and property through a civil case, but they did not initially charge anyone.
In February 2017 prosecutors filed a list of property seized that included assets belonging to multiple people, including Beach and the Thomleys. That civil case has been delayed pending a criminal investigation.
Three people have since pleaded guilty, including pharmacist Jason May, a co-owner of Advantage Pharmacy. Dr. Albert Diaz, 78, of Biloxi was convicted by a jury in March and sentenced to 3.5 years in prison. The Sun-Herald newspaper reported Jay Schaar, a pharmaceutical sales rep who has also pleaded guilty, recruited Diaz to write prescriptions for compound drugs that were filled at Advantage Pharmacy.
Hope Thomley filed a motion saying her due process rights were violated because of secret filings related to the civil case. U.S. District Judge Tom S. Lee filed an order on May 24 giving prosecutors seven days to explain the status of the investigation. That response is sealed and unavailable to the public.
However, just a few weeks later the Thomleys, Beach and Parker were arrested.
A federal grand jury filed the indictment on May 15, but it was sealed until Monday.
Beach grew up in Columbia, graduating from Columbia High School in 1990, and played baseball at Pearl River Community College.
He opened Advantage Pharmacy in Lamar County in 2008, according to the 50-page indictment that lays out the case.
It says the co-defendants conspired to defraud health care companies of more than $200 million between 2012 and 2015 through prescriptions for compound medications.
The indictment said Advantage Pharmacy was initially a retail pharmacy but shifted to compounding in 2012.
“Beach, May and co-conspirators identified promoted, and mass-produced formulations of compound medications that health care benefit programs, including TRICARE, would reimburse at particularly high rates, regardless of the individual medical needs of the beneficiaries or the effectiveness of the high-yield compounded medication,” the indictment said.
One of Beach’s attorneys, Andy Sumrall of Jackson, could not immediately be reached for comment Tuesday.
How compounding allegedly yielded pharmacies millions
Here’s how the alleged $200 million pharmacy scheme worked, based on allegations made in court documents:
Compound medications are custom drugs mixed by pharmacists. They are usually reserved for specialized uses, like patients with allergies to normal medications.
Beginning in about 2012, insurance companies changed the way they paid for compounded d rugs by paying for each individual ingredient rather than the entire mixture.
That led some pharmacies to begin submitting false claims to insurance for a series of different compound mixtures to determine which would get the most reimbursement. Much of the fraud was taken from TRICARE, the military health insurance program.
Pharmacy owners would find ways to get orders for those particular medications that yielded the most money. Many of these were prescription pain creams. One dietary supplement, according to court documents, contained ordinary, over-the-counter medications, yet insurance companies paid thousands of dollars per bottle.
The pharmacies mass-produced certain lucrative compounds prior to receiving prescriptions for them. They then made pre-printed, check-the-box prescription forms that set forth the formulas for the compounds.
Doctors and nurse practitioners allegedly received kickbacks — a cut of the revenue for prescriptions they wrote.
Normally patients are required to pay co-pays for prescriptions. This prevents fraud by keeping people from getting prescriptions they don’t need. However, the indictment says in this case the pharmacies waived or reduced co-pays while making it look like to insurance companies that they were being collected.
Pharmacy owners also set up marketing companies to recruit patients to get the prescriptions and paid a cut to those companies.
