Pharmacy owner sentenced for role in health care fraud scheme

HATTIESBURG, Miss. (WDAM) – A Ridgeland pharmacy owner was sentenced Thursday morning for his role in the largest health care fraud case ever prosecuted in Mississippi.

Senior U.S. District Judge Keith Starrett sentenced 51-year-old Thomas Edward Spell Jr. to 10 years in federal prison and ordered him to pay $243,550,503 in restitution.

Spell pleaded guilty in August 2018 to criminal information outlining his role in a scheme to defraud TRICARE, the health care benefit program for military members, veterans and their families.

“This defendant ripped off every single military service member, veteran and American taxpayer when he defrauded TRICARE,” said U.S. Attorney Mike Hurst. “The special agents, DOJ trial attorneys, our AUSAs and other law enforcement partners who investigated and prosecuted this case are to be commended for their diligence and fortitude in bringing this criminal to justice. We will continue to be vigilant in detecting, arresting and prosecuting those who defraud government services that benefit our military and our veterans.”

Prosecutors said Spell, who owns a Madison pharmacy and others across the country, and co-conspirators marketed compound medications at his pharmacies from December 2014 to January 2016. Spell and others are accused of formulating the compound medications to maximize profits from rather than meet the needs of patients.

TRICARE and other health benefit programs reimbursed more than $243 million in fraudulent claims as a result of the scheme.

“Fraud against government funded health care systems like TRICARE not only costs taxpayers billions each year, but deprives funding for critical medical care and benefits for our current and former military members who bravely serve our country,” said FBI Special Agent in Charge Michelle A. Sutphin. “Schemes like these are a plague on the nation’s health care systems. Individuals and organizations that participate in this type of fraud will continue to be high priority investigations for the FBI.”

According to the U.S. Attorney’s office, Spell and others waived TRICARE’s required copayments, instead having employees pay the copayments through prepaid debit cards and money orders and then reimbursing the employees. Spell and co-conspirators also paid kickbacks and bribes to marketers to obtain prescriptions regardless if the medication was necessary for the patient.

Spell is accused of receiving more than $29 million as a result of the scheme.

“Thomas Spell systematically defrauded the government and the taxpaying public,” said IRS CI Special Agent in Charge Thomas J. Holloman III. “His desire for money, along with the power and material items it buys, drove him to perpetrate crimes against our healthcare system and prey upon many of the vulnerable in our society. Thanks to the financial expertise and diligence of IRS-CI special agents, who worked side-by-side with other federal and state law enforcement officers to uncover these schemes, Spell will now face the consequences of his actions.”

The health care fraud scheme is the largest every investigated and prosecuted in Mississippi, according to Hurst. So far, 20 people have been charged and 14 convicted in the Southern District of Mississippi.

The investigation is ongoing.