Department of Labor Busts Physicians and Pharmacists

The arrests all across Texas represent the latest round in a 12-year crackdown by federal authorities against what they call “pill mills,” many of which also produced high-priced compounded creams for injured federal workers.

“As we continue to dedicate resources to battle health care and opioid fraud schemes in Texas and elsewhere, we are shining an inescapable light on dirty doctors, clinic owners, pharmacists and others who may have long believed they could perpetrate their frauds behind closed doors,” Assistant U.S. Attorney General Brian Benckowski said in a statement Wednesday.

Eight of the defendants, charged with defrauding the U.S. Department of Labor’s Office of Workers’ Compensation Programs, are no strangers to prosecutors. They were indicted in 2017 on charges that they and three pharmacies in the Dallas area billed the federal compensation program as much as $28,000 per tube for pain and scar creams.

Some of those defendants may be in the midst of plea negotiations on the 2017 charges, but now face the superseding indictment handed down last week. The new indictment adds several new charges, according to federal court records and the U.S. Attorney’s Office in Dallas.

As a condition of their release after the 2017 charges, the defendants were prohibited from billing for compounds, said spokeswoman Erin Dooley.

The latest wave of charges related to the federal cream scheme comes as something of a surprise to some criminal defense lawyers. Although the Department of Labor’s workers’ comp program was slower than some other federal insurance programs to react to exorbitant compounded creams, the office did announce new restrictions in 2016, and dozens of people have been prosecuted across the country since then.

The latest arrests may be part of the tail end of the prosecutions for the schemes, which were allowed to fester because the federal comp agency was slow to react, said attorney Nick Oberheiden, of Dallas. He said he has represented clients in about 150 federal compound-cream fraud cases in recent years.

“The question is, how was it possible that the Department of Labor kept offering these incentives and paying the crazy reimbursement without some better auditing or controls?” he asked. “It created an opportunity for people to try and get lucky.”

The Texas arrests are part of the Medicare Fraud Strike Force, a joint effort by the U.S. Department of Justice and the Department of Health and Human Services to deter fraud, and stem overprescribing in the age of a nationwide opioid addiction crisis, prosecutors said. Since 2007, the operation has charged almost 4,000 people with health care fraud.

Prosecutors are right to go after the blatantly fraudulent pill mills that have devised ways to bill insurance programs for drugs that are unnecessary and overpriced, Oberheiden said. But in some cases, he said, doctors and pharmacies are getting caught up in investigations because they may not realize that prosecutors often treat any type of referral arrangement as a kickback.

“Under federal law, that’s illegal,” he said.

In some arrangements, a pharmacy will bill the insurance program for the reimbursement, then provide a referral fee as high as 40% to doctors who prescribe the medications, and another fee to teams that find the injured workers and other patients who are referred to certain doctors, Oberheiden said.

He recommended a two-part test that medical providers must pass to avoid federal prosecution.

“First, was the prescription medically necessary? Did the doctor have a valid reason for the prescription?” he asked. “And second, does the patient’s chart contain those reasons for the prescription?”

Of the 58 defendants arrested this week, the nine charged in connection with defrauding the federal workers’ compensation program, laundering money and evading taxes, are:

• Jamshid Noryian, also known as James, the owner of Ability Pharmacy, Industrial & Family Pharmacy and Park Row Pharmacy, all in the Dallas area.
• Dehshid Nourian, also known as David, a pharmacist and president of those pharmacies.
• Christopher Rydberg, an official with Bandoola Pharmaceuticals.
• Leyla Nourian, a dentist and business owner.
• Ashraf Mofid, also known as Sherri, an official with Bandoola Pharmaceuticals.
• Dr. Leslie Benson, an occupational medicine physician and owner of three clinics in central Texas.
• Dr. Michael Taba, and orthopedic surgeon.
• Ali Khavarmanesh, co-owner of Park Row pharmacy.
• Dr. Kevin Williams, a former orthopedic surgeon.

All except Khavarmanesh were indicted in the 2017 investigation, prosecutors said. Two people who worked for Benson’s clinic also were charged with health care fraud last October.