A Maumelle man who in October admitted being part of a conspiracy to defraud the U.S. military's health insurer of more than $1 million was sentenced Wednesday to 16 months in federal prison.
Michael "Chance" Beeman, 49, had already been ordered to forfeit $218,940.32, which represents the amount of money he pocketed as a result of the Arkansas-based scheme that altogether defrauded Tricare of over $1 million between December 2014 and July 2015.
Under federal sentencing guidelines, Beeman was facing 21 to 27 months behind bars and a fine of between $4,000 and $40,000, but his attorney, Mark Hampton of Little Rock, argued that the range was too high because it was partly based on a misdemeanor offense committed 14 years ago that should have been expunged, and two driving-while-intoxicated convictions that occurred years ago.
Assistant U.S. Attorney Alex Morgan, acknowledging the over-emphasis on Beeman's criminal history, recommended a 16-month sentence, noting that Brian Means, who had similar culpability, was recently sentenced to 15 months.
Although Hampton and Means' attorney both asked Chief U.S. District Judge Brian Miller to sentence their clients similarly to the eight-month sentence he imposed in March on Michael Sean Brady, another admitted participant in the conspiracy, Miller said Brady was different. The judge said Brady didn't have a criminal record and the court wasn't shown any evidence that Brady knew he was committing a crime but continued to participate in the scheme anyway.
The three men were all medical sales representatives who admitted recruiting patients in several states to receive prescriptions for expensive compounded drugs manufactured by a Mississippi compounding pharmacy.
On April 12, Miller sentenced Charlotte Leija, 38, of Conway to 18 months in connection with her guilty plea, also to conspiring to violate the anti-kickback statute, and ordered her to forfeit $253,643.59. She had a larger role in the conspiracy, by copying the signature of an unsuspecting doctor for whom she worked to authorize hundreds of unnecessary prescriptions for Tricare beneficiaries. The prescriptions, each with 11 refills, were for expensive compounded drugs such as pain cream, scar cream and supplements, for which Tricare paid the pharmacy tens of thousands of dollars per month, per patient.
The pharmacy in turn paid Brad Duke, the admitted leader of the Arkansas scheme, who paid the others. Duke, 43, of Little Rock pleaded guilty on Oct. 3 but doesn't have a sentencing date yet. He has been ordered to forfeit $1,112,020.09.
Hampton argued Wednesday that Beeman, like Brady, was "sold" on recruiting patients by Duke. But, Hampton said, Beeman at first believed the recruitment effort was legitimate, so much so that he even drew up his own independent contractor agreements with other participants to ensure they would all pay their share of taxes.
"On down the line, once we started getting the checks," he said, "we realized, 'Hey, something's not right here.'"
"Most shocking is how Tricare allowed the kind of insane compounding reimbursement for stuff that was worthless," Hampton said, complaining that the insurer apparently wasn't subjected to any oversight.
"Someone in the Tricare office could have at least checked the product," Hampton said, asserting that, "Today, I could buy four over-the-counter products and concoct my own cream for $15," which he said would be just as effective as creams for which Tricare reimbursed the pharmacy as much as $14,000 a tube.
He complained that last year, his 87-year-old mother, who is on Social Security, went to the emergency room with back pain. Later, he said, she received numerous calls from scam artists offering her back braces, knee braces and elbow protectors. Though she turned them all down, he said, she still received 12 unwanted devices over a two-year period. Even though she sent them back, she later realized that Social Security reimbursed one of the suppliers for a $650 back brace she never ordered or used.
Hampton, noting that "I can get a better quality one [locally] for $39," said he reported the fraud to Social Security and asked them to "please investigate."
Morgan told the judge, "I couldn't agree more. He takes the words out of my mouth," and noted that a federal investigation called Operation Brace Yourself was conducted a few months ago in Florida to target just such scams.
Calling the system "incredibly vulnerable," he said it's up to the people who have an opportunity to participate in any part of such a scheme to refuse and report it.
"One person sends back [the device]," he said. "Another decides to exploit it, and that's what's happened here."
In the Tricare scam in which Beeman participated, Morgan said, "there was zero question about where this money came from."
He said the people who participated, who are experienced in the field of medical sales, knew the country's prescription drug system didn't operate in such a way as to reward each of them with monthly paychecks totalling tens of thousands of dollars, but they did it anyway -- even sending gift cards to Tricare beneficiaries to encourage them to keep receiving the unwanted compounded medications.
Morgan said Beeman sent so many gift cards to one family, encouraging them to accept over $500,000 in useless medications, "so he can put $100,000 in his pocket."
"This," he said, "is a person who jumped in with eyes wide open from day one."
Morgan said Beeman's knowledge that he was doing wrong was apparent in the messages he relayed from Duke to other patient recruiters, advising them, "Don't talk to the pharmacist."
"That's coaching people to lie," Morgan argued.
In response to Hampton's claim that Beeman only gradually realized something was amiss, Morgan said, "This is not something that creeps up on you over a period of time. ... There was an opportunity for money to be made, and he jumped right in."
The Arkansas investigation was one of many conducted across the country by the FBI and the U.S. Department of Health and Human Services after Tricare paid nearly $2 billion for compounded prescriptions in 2015, representing an 18-fold increase over previous years.
Metro on 05/30/2019