At a Tennessee Crossroads, Two Pharmacies, a Monkey, and Millions of Pills

CELINA, Tenn. — It was about 1 a.m. on April 19, 2016, when a burglary alarm sounded at Dale Hollow Pharmacy in Celina, a tiny town in the rolling, wooded hills near the Kentucky border.

Two cops responded. As their flashlights bobbed in the darkness, shining through the pharmacy windows, they spotted a sign of a break-in: pill bottles scattered on the floor.

The cops called the co-owner, Thomas Weir, who arrived within minutes and let them in. But as quickly as their flashlights beamed behind the counter, Weir demanded the cops leave. He said he’d rather someone “steal everything” than let them finish their search, according to a police report and body camera footage from the scene.

“Get out of there right now!” Weir shouted, as if shooing off a mischievous dog. “Get out of there!”

The cops argued with Weir as he escorted them out. They left the pharmacy more suspicious than when they’d arrived, triggering a probe in a small town engulfed in one of the most outsize concentrations of opioids in a pill-ravaged nation.

Nearly six years later, federal prosecutors have unveiled a rare criminal case alleging that Celina pharmacy owners intentionally courted opioid seekers by filling dangerous prescriptions that would have been rejected elsewhere. The pharmacies are accused of giving cash handouts to keep customers coming back, and one allegedly distributed its own currency, “monkey bucks,” inspired by a pet monkey that was once a common sight behind the counter. Two pharmacists admitted in plea agreements they attracted large numbers of patients from “long distances” by ignoring red flags indicating pills were being misused or resold. In their wake, prosecutors say, these Celina pharmacies left a rash of addiction, overdoses, deaths, and millions in wasted tax dollars.

“I hate that this is what put us on the map,” said Tifinee Roach, 38, a lifelong Celina resident who works in a salon not far from the pharmacies and recounted years of unfamiliar cars and unfamiliar people filling the parking lots. “I hate that this is what we’re going to be known for.”

Celina, an old logging town of 1,900 people about two hours northeast of Nashville, was primed for this drug trade: In the shadow of a dying hospital, four pharmacies sat within 1,000 feet of each other, at the crux of two highways, dispensing millions of opioid pills. Before long, that intersection had single-handedly turned Tennessee’s Clay County into one of the nation’s pound-for-pound leaders of opioid distribution. In 2017, Celina pharmacies filled nearly two opioid prescriptions for every Clay County resident — more than three times the national rate — according to the Centers for Disease Control and Prevention.

Visitors once came to Celina to tour its historical courthouse or drop their lines for smallmouth bass in the famed fishing lake nearby. Now they came for pills.

Soon after Weir’s police encounter in 2016, the Drug Enforcement Administration set its sights on his two Celina pharmacies, three doors apart — Dale Hollow Pharmacy and Xpress Pharmacy. Separately, investigators examined the clinic of Dr. Gilbert Ghearing, which sat directly between Dale Hollow and Xpress and leased office space to a third pharmacy in the same building, Anderson Hometown Pharmacy. Its owners and operators have not been charged with any crime.

In December, a federal judge unsealed indictments against Weir and the other owners of Dale Hollow and Xpress pharmacies, Charles “Bobby” Oakley and Pamela Spivey, alleging they profited from attracting and filling dangerous and unjustifiable opioid prescriptions. Charges were also filed against William Donaldson, the former pharmacist and owner of Dale Hollow, previously convicted of drug dealing, who allegedly recruited most of the customers for the scheme.

The pharmacists at Dale Hollow and Xpress, John Polston and Michael Griffith, pleaded guilty to drug conspiracy and health care fraud charges and agreed to cooperate with law enforcement against the other suspects.

Ghearing was indicted on drug distribution charges for allegedly writing unjustifiable opioid prescriptions in a separate case in 2019. He pleaded not guilty, and his case is expected to go to trial in September.

‘An American Tragedy’

The Celina indictment comes as pharmacies enter an era of new accountability for the opioid crisis. In November, a federal jury in Cleveland ruled pharmacies at CVS, Walgreens, and Walmart could be held financially responsible for fueling the opioid crisis by recklessly distributing massive amounts of pain pills in two Ohio counties. The ruling — a first of its kind — is expected to reverberate through thousands of similar lawsuits filed nationwide.

Criminal prosecutions for such actions remain exceedingly rare. The Department of Justice in recent years increased prosecutions of doctors and pain clinic staffers who overprescribed opioids but files far fewer charges against pharmacists, and barely any against pharmacy owners, who are generally harder to hold directly responsible for prescriptions filled at their establishments.

In a review of about 1,000 news releases about legal enforcement actions taken by the Department of Health and Human Services since 2019, KHN identified fewer than 10 similar cases involving pharmacists or pharmacy owners being criminally charged for filling opioid prescriptions. Among those few similar cases, none involved allegations of so many opioids flowing readily through such a small place.

The Celina case is also the first time the Department of Justice sought a restraining order and preliminary injunction against pharmacies under the Controlled Substances Act, said David Boling, a spokesperson for the U.S. Attorney’s Office for the Middle District of Tennessee. DOJ used the civil filing to shut down Dale Hollow and Xpress pharmacies quickly in 2019, allowing prosecutors more time to build a criminal case against the pharmacy owners.

Former U.S. Attorney Don Cochran, who oversaw much of the investigation, said the crisis in Celina was so severe it warranted a swift and unique response.

Cochran said it once made sense for small pharmacies to be clustered in Celina, where a rural hospital served the surrounding area. But as the hospital shriveled toward closure, as have a dozen others in Tennessee, the competing pharmacies turned to opioids to sustain themselves and got hooked on the profits, he said.

“It’s an American tragedy, and I think the town was a victim in this,” Cochran said. “The salt-of-the-earth, blue-collar folks that lived there were victimized by these people in these pharmacies. I think they knew full well this was not a medical necessity. It was just a money-making cash machine for them.”

And much of that money came from taxpayers. In its court filings, DOJ argues the pharmacies sought out customers with Medicaid or Medicare coverage — or signed them up if they didn’t have it. To keep these customers coming back, the pharmacies covered their copays or paid cash kickbacks whenever they filled a prescription, prosecutors allege. The pharmacies collected more than $2.4 million from Medicare for opioids and other controlled substances from 2012 to 2018, according to the court filings.

Prosecutors say the pharmacies also paid kickbacks to retain profitable customers with non-opioid prescriptions. In one case, Dale Hollow gave $100 “payouts” to a patient whenever they filled his prescription for mysoline, an anti-seizure drug, then used those prescriptions to collect more than $237,000 from Medicare, according to Polston’s plea agreement.

Attorneys for Weir, Oakley, Donaldson, Spivey, Polston, and Griffith either declined to comment for this article or did not respond to requests for comment.

Ronald Chapman, an attorney for Ghearing, defended the doctor’s prescriptions, saying he’d done “the best he [could] with what was available” in a rural setting with no resources or expertise in pain management.

Chapman added that, while he does not represent the other Celina suspects, he had a theory as to why they drew the attention of federal law enforcement. As large corporate pharmacies made agreements with the federal government to be more stringent about opioid prescriptions, they filled fewer of them. Customers then turned to smaller pharmacies in rural areas to get their drugs, he said.

“I’m not sure if that’s what happened in this case, but I’ve seen it happen in many small towns in America. The only CVS down the street, or the only Rite Aid down the street, is cutting off every provider who prescribes opioids, leaving it to smaller pharmacies to do the work,” Chapman said.

Donaldson, reached briefly at his home in Celina on March 9, insisted the allegations levied against Dale Hollow and Xpress could apply to many pharmacies in the region.

“It wasn’t just them,” Donaldson said.

The Monkey and the Monkey Bucks

Long before it was called Dale Hollow Pharmacy, the blue-and-white building that moved millions of pills through Celina was Donaldson Pharmacy, and Donaldson was behind the counter doling out pills.

Donaldson owned and operated the pharmacy for decades as the eccentric son of one of the most prominent families in Celina, where a street, a park, and many businesses bear his surname. Even now, despite Donaldson’s prior conviction for opioid crimes and his new indictment, an advertisement for “Donaldson Pharmacy” hangs at the entrance of a nearby high school.

“Bill has always had a heart of gold, and he would help anyone he could. I just think he let that, well …” said Pam Goad, a neighbor, trailing off. “He’s always had a heart of gold.”

According to interviews with about 20 Celina residents, including Clay County Sheriff Brandon Boone, Donaldson is also known to keep a menagerie of exotic animals, at one point including at least two giraffes, and a monkey companion, “Carlos,” whom he dressed in clothing.

The monkey — a mainstay at Donaldson Pharmacy for years — both attracted and deterred customers. Linda Nelson, who owns a nearby business, said Carlos once escaped the pharmacy and, during a scrap with a neighbor’s dogs, tore down her mailbox by snapping its wooden post in half.

But the monkey wasn’t the only reason Donaldson Pharmacy stood out.

According to a DEA opioid database published by The Washington Post, Donaldson Pharmacy distributed nearly 3 million oxycodone and hydrocodone pills from 2006 to 2014, making it the nation’s 20th-highest per capita distributor during that period. It retained its ranking even though the pharmacy closed in 2011, when Donaldson was indicted for dispensing hydrocodone without a valid prescription.

Donaldson confessed to drug distribution and was sentenced to 15 months in prison. The pharmacy’s name was changed to Dale Hollow and ended up with Donaldson’s brother-in-law, Oakley. In 2014, Oakley sold 51% of the business to Weir, who also bought a majority stake of Xpress Pharmacy, three doors away, according to the DOJ’s civil complaint.

Under Weir’s leadership, these two pharmacies became an opioid hub with few equals, prosecutors say. From 2015 to 2018, Dale Hollow and Xpress pharmacies were the fourth-and 11th-highest per capita opioid purchasers in the nation, according to the DOJ, citing internal DEA data.

Many of these prescriptions were for Subutex, an opioid that can be used to treat addiction but is itself prone to abuse. Unless the patient is pregnant or nursing or has a documented allergy, Tennessee law requires doctors instead to prescribe Suboxone, an alternative that is much harder to abuse.

But at the Celina pharmacies, prescriptions for Subutex outnumbered those for Suboxone by at least 4-to-1, prosecutors say. In their plea agreements, pharmacists from Dale Hollow and Xpress described stores that thrived on the trade in Subutex, and said Weir set “mandates” for how many Subutex prescriptions to fill and instructed them to “never run out.”

Griffith, the head pharmacist at Xpress, said the pharmacy in 2015 created flyers specifically advertising Subutex, then delivered them on trays of cookies to practices throughout Tennessee, including some hours away. In the following two years, the amount of Subutex dispensed by Xpress increased by about eightyfold, according to his plea agreement.

Dale Hollow didn’t need flyers or cookies. It had Donaldson.

After getting out of prison in 2014, Donaldson was hired by the pharmacy he once owned, where he “recruited and controlled” about 50% to 90% of customers, according to the indictment filed against him. The pharmacy also enticed customers by distributing a Monopoly-like currency called “monkey bucks” — an apparent callback to Carlos — that could be spent at the pharmacy like cash, the indictment states.

Prosecutors also allege that, from a desk inside Dale Hollow, Donaldson would sign customers up for Medicare or Medicaid, then use a vehicle provided by the pharmacy to drive them to a doctor’s office to get opioid prescriptions, then back to Dale Hollow where he’d offer to cover their copays himself if they kept their business at the pharmacy. Sometimes, he would text the Dale Hollow pharmacist with instructions to fill specific prescriptions, or just to fill more of them, according to federal court records.

“Y’all have got to get your numbers up. Fill fill,” Donaldson texted Polston in 2018, according to his plea agreement.

By then, however, all those prescriptions had drawn unwanted attention.

In August 2018, Dale Hollow and Xpress pharmacies were raided by DEA agents, who brought with them Fox News’ Geraldo Rivera and a television crew. Six months later, DOJ filed its civil complaint, persuading a federal judge to immediately close both pharmacies.

Today, Dale Hollow Pharmacy sits shuttered, as it has been for the past three years, and a paper sign taped to the door says animals are not allowed inside by order of the DEA. The building that was once Xpress Pharmacy reopened this year as an unrelated pharmacy with a fresh coat of paint. Ghearing’s clinic and Anderson Hometown Pharmacy are closed.

Most of Celina’s opioid prescriptions are gone, too. According to the latest available CDC data, Clay County reported about 32 opioid prescriptions per 100 residents in 2020 — one-sixth the rate of 2017’s.

UnitedHealth’s Surgical Care Affiliates fires back at DOJ in collusion case

Senate narrowly confirms new head of Justice Department's criminal  division, who worked for Russian bank | PBS NewsHour

Surgical Care Affiliates, which is part of UnitedHealth Group’s Optum division, hit back at the Department of Justice’s defense of a federal case accusing SCA of agreeing with competitors to not poach senior-level employees.

In a May 14 proposed reply brief supporting its bid to dismiss the case, SCA argued the Justice Department’s defense is unlawful and violates due process rights.

“The government seeks to criminally prosecute as a per se Sherman Act violation an alleged agreement not to solicit another company’s employees, even though no court in history has ever definitively found such an agreement unlawful under any mode of analysis,” according to the proposed reply brief. “Not only is this kind of agreement not illegal per se, but subjecting a practice to per se condemnation for the first time in a criminal prosecution would violate bedrock guarantees of due process.” [emphasis in original]

In January, a federal grand jury charged SCA and its related entities, which own and operate outpatient medical care centers, with entering and engaging in conspiracies with other healthcare companies to suppress competition between them for the services of senior-level employees. 

In an email statement to Becker’s Hospital Review, SCA said at the time of the charges: “This matter involves alleged conduct seven years before UnitedHealth Group acquired SCA and does not involve any SCA ambulatory surgery centers, their joint owners, physician partners, current leadership or any other UnitedHealth Group companies. SCA disagrees with the government’s position, and will vigorously defend itself against these unjustified allegations.”

The charges are the first from the department’s antitrust division in its ongoing investigation into employee allocation agreements. Violators of the Sherman Act can face a maximum $100 million fine, or twice the gain derived from the crime or twice the loss suffered by victims if the amount is greater than the maximum. 

New York physician charged with manslaughter in patient death

Legal and Illegal Drug Overdose: Guide to Signs, Symptoms, and Help

A New York physician has been charged with manslaughter in the second degree and is facing other felonies related to the overdose death of a patient, New York Attorney General Letitia James announced Feb. 19. 

Sudipt Deshmukh, MD, allegedly prescribed a lethal mix of opioids and other controlled substances that resulted in the overdose death of a patient. The physician allegedly knew the patient struggled with addiction.

An indictment, unsealed Feb. 18, alleges that between 2006 and 2016, Dr. Deshmukh ignored his professional responsibilities by prescribing combinations of opioid painkillers and other controlled substances, including hydrocodone, methadone and morphine, without regard to the risk of death associated with the combinations of those drugs.  

Dr. Deshmukh is facing several felony charges, including healthcare fraud, for allegedly causing Medicare to pay for medically unnecessary prescriptions. 

The indictment comes after the attorney general’s office filed a felony complaint against Dr. Deshmukh in August. In 2019, the New York State Office of Professional Medical Conduct found that he committed several counts of misconduct. 

Beaumont victimized by medical equipment thieves, feds say

https://www.detroitnews.com/story/news/local/michigan/2021/01/14/beaumont-victimized-medical-equipment-thieves-feds-say/6655265002/

The indictment describes an inside job involving Beaumont employees who sold stolen sponges, adhesives and instruments used to inspect eyes and ears. The equipment included cystoscopes, a thin tube with a camera that is inserted through the urethra and into the bladder.

“Some of the medical devices stolen and re-sold over the Internet were possibly contaminated devices that were previously used in various surgical and other medical procedures on patients,” according to the indictment.

The three individuals charged in the indictment are:

  • Paul Purdy, 49, of Bellbrook, Ohio
  • Valdet Seferovic, 32, of Auburn Hills
  • Zafar Khan, 40, of Fenton

Purdy and Seferovic not respond to messages seeking comment Thursday while Harold Gurewitz, a lawyer for Khan, declined comment. The three defendants are scheduled to make initial appearances Jan. 21 in federal court.

“These defendants used their employment status to circumvent the safety protocols established by Beaumont Hospital to profit from the theft of medical devices and put the health and safety of the general public at risk in doing so,” U.S. Attorney Matthew Schneider said in a statement.

The wire fraud and conspiracy charges listed in the 18-count indictment are punishable by up to 20 years in federal prison.

Beaumont officials have cooperated fully with the investigation, health system spokesman Mark Geary wrote in an email to The Detroit News.

This kind of theft does a disservice to more than just Beaumont — it does a disservice to the community,” Geary wrote. “We have confidence in the legal process and trust a just result will be achieved.”

Purdy and Seferovic were friends who worked at Beaumont and had access to storage areas inside one of the system’s hospitals, prosecutors alleged. The duo gained access to medical supplies and devices, according to the government, and devised a plan to steal the equipment and sell the items throughout the U.S.

Purdy, who worked for Beaumont until resigning in 2017, never told buyers the items were stolen, prosecutors said. After he quit, Purdy recruited Seferovic to continue stealing items from the medical supply, cleaning and disinfecting rooms, according to prosecutors.

“Medical devices that are removed from their rightful place in a hospital or other medical setting put patients’ health at risk by denying them access to needed diagnostic imaging and treatment,” Lynda Burdelik, special agent in charge of the U.S. Food and Drug Administration’s Criminal Investigations field office in Chicago, said in a statement.

Purdy paid Seferovic for stolen items via PayPal and resold the devices on eBay and Amazon, according to the government. On March 28, 2018, the indictment alleges Purdy received a $4,800 wire payment from the sale of two cystoscopes.

That same day, Seferovic received a $2,550 payment via PayPal, according to the government.

In fall 2017, Seferovic also agreed to steal and sell medical devices and supplies to Khan, who owns Wholesale Medical & Surgical Suppliers of America, LLC in Flint, according to the indictment.

Seferovic would transfer stolen supplies to Khan during meetings in metro Detroit, including at a Walmart parking lot, according to the indictment. Khan, in turn, would sell the supplies and devices online at below retail price.

Seferovic’s job duties and status was unclear Thursday.

The investigation and alleged crimes have prompted internal changes at Beaumont.

“…Beaumont has enhanced security protocols and implemented additional checks and balances across the organization to reduce the chances of something like this happening again,” Geary said.

DOJ charges execs, others with elaborate $1.4B billing scheme using rural hospitals

https://www.healthcaredive.com/news/doj-charges-execs-others-with-elaborate-14b-billing-scheme-using-rural-h/580785/

Office of Attorney Recruitment & Management | Department of Justice

Dive Brief:

  • The U.S. Department of Justice is charging 10 defendants for an “elaborate” pass-through billing scheme that used small rural hospitals across three states as shells to submit fraudulent claims for laboratory testing to commercial insurers, jacking up reimbursement.
  • The defendants, including hospital executives, lab owners and recruiters, billed private payers roughly $1.4 billion from November 2015 to February 2018 for pricey lab testing, reaping $400 million.
  • The four rural hospitals used in the scheme are: Cambellton-Graceville Hospital, a 25-bed rural facility in Florida; Regional General Hospital of Williston, a 40-bed hospital in Florida; Chestatee Regional Hospital, a 49-bed facility in Georgia; and Putnam County Memorial Hospital, a 25-bed hospital in Missouri. Only Putnam emerged from the scheme relatively unscathed: Chestatee was sold to a health system that plans to replace it with a newer facility, Cambellton-Graceville closed in 2017 and RGH of Williston was sold for $100 to an accounting firm earlier this month.

Dive Insight:

The indictment, filed in the Middle District of Florida and unsealed Monday, alleges the 10 defendants, using management companies they owned, would take over rural hospitals often struggling financially. They would then bill commercial payers for millions of dollars for pricey urine analysis drug tests and blood tests through the rural hospitals, though the tests were normally conducted at outside labs, and launder the money to hide their trail and distribute proceeds.

The rural hospitals had negotiated rates with commercial insurers for higher reimbursement for tests than if they’d been run at an outside labs, so the facilities were used as a shell for fraudulent billing for often medically unnecessary tests, the indictment alleges.

The defendants, aged 34 to 60, would get urine and other samples by paying kickbacks to recruiters and healthcare providers, like sober homes and substance abuse treatment centers.

Screening urine tests, to determine the presence or absence of a substance in a patient’s system, is generally inexpensive and simple — it can be done at a substance abuse facility, a doctor’s office or a lab. But confirmatory tests, to identify concentration of a drug, are more precise and sensitive and have to be done at a sophisticated lab.

As such they’re more expensive and are typically reimbursed at higher rates than screening urine tests. None of the rural hospitals had the capacity to conduct confirmatory tests, or blood tests, on a large scale, but frequently billed in-network insurers, including CVS Health-owned Aetna, Florida Blue and Blue Cross Blue Shield of Georgia, for the service from 2015 to 2018, the indictment says.

Rural hospitals are facing unprecedented financial stress amid the pandemic, but have been fighting to keep their doors open for years against shrinking reimbursement and lowering patient volume. That can give bad actors an opportunity to come in and assume control.

One of the defendants, Jorge Perez, 60, owns a Miami-based hospital operator called Empower, which has seen many of its facilities fail after insurers refused to pay for suspect billing. Half of rural hospital bankruptcies last year were affiliated with Empower, which controlled 18 hospitals across eight states at the height of the operation. Over the past two years, 12 of the hospitals have declared bankruptcy. Eight have closed, leaving their rural communities without healthcare and a source of jobs.

“Schemes that exploit rural hospitals are particularly egregious as they can undermine access to care in underserved communities,” Thomas South, a deputy assistant inspector general in the Office of Personnel Management Office of Inspector General, said in a statement.

 

 

 

 

 

Former UMMS board member indicted in fraud scheme

https://www.beckershospitalreview.com/legal-regulatory-issues/former-umms-board-member-indicted-on-11-counts-of-fraud-tax-evasion.html

Image result for healthy holly children's book

Former Baltimore Mayor Catherine Pugh, who served on the board of University of Maryland Medical System for 18 years, was indicted on charges of wire fraud and tax evasion related to a children’s book scandal that involved the Baltimore-based health system and Oakland, Calif.-based Kaiser Permanente, a local CBS affiliate reports.

The indictment was unsealed Nov. 20, ahead of Ms. Pugh’s scheduled hearing on Nov. 21. If convicted, Ms. Pugh could face up to 100 years in prison and be required to forfeit her home and repay more than $769,000 allegedly obtained through the scheme.

The indictment alleges Ms. Pugh conspired with city employees to defraud buyers of her Healthy Holly children’s books, according to CBS, which published the indictment in full. It alleges Ms. Pugh arranged five $100,000 deals with UMMS to donate a total of 100,000 books to Baltimore public schools. The books were allegedly never delivered, and instead rerouted to alternate storage facilities around the city, distributed at campaign events and double-sold to other customers.

The indictment also alleges Ms. Pugh used Healthy Holly profits to fund straw donations to her mayoral campaign and to buy a house in Baltimore. She also faces allegations of tax evasion related to Healthy Holly sales, according to the report.

CBS notes Kaiser Permanente also disclosed buying $114,000 of the books at a time that overlaps with winning a $48 million contract from the city, according to the report.

The two city officials connected to the scheme pleaded guilty to conspiracy and tax evasion, according to the report.

Read the full story and access the full indictment here.