A Georgia man has been sentenced to more than 11 years in federal prison and ordered to pay $11.8 million in restitution to Tricare for his role in a massive health care fraud scheme.
Erik Santos, 51, of Braselton, Ga., was sentenced May 27 in federal district court in Fort Lauderdale, Fla. He had pleaded guilty on Jan. 27 to one count of conspiring to commit health care fraud and wire fraud, according to court documents. In addition to the $11.8 million in restitution to Tricare, Santos must forfeit $7.6 million in personal gains from the scheme, which charged Tricare thousands of dollars for “compounded medications” that were little more than common pain creams or scar creams, according to Justice Department officials.
Investigators alleged that Santos, owner of two marketing companies, and his co-conspirators, ran a compounding pharmacy fraud scheme in 2014 and 2015. They allege Santos paid recruiters to convince Tricare beneficiaries to fill prescriptions for expensive, supposedly tailor-made compounded medications that the beneficiaries didn’t need. Santos also paid doctors to approve pre-printed prescriptions for large amounts of these medications, and the doctors didn’t see the beneficiaries or otherwise consider their medical needs before approving the prescriptions, according to court documents.
Then Santos would steer the Tricare patients to Patient Care America, a compounding pharmacy in Broward County, Fla. PCA would bill Tricare for these expensive drug compounds — many of which cost $10,000 to $15,000 for a one-month supply, according to Justice Department officials.
Santos’ fraudulent referrals caused an actual loss to Tricare of about $12 million; and the PCA pharmacy paid Santos more than $7.6 million in referral kickbacks, according to Justice officials.
“This significant sentence recognizes the seriousness of the crime,” said Juan Antonio Gonzalez, acting U.S. Attorney of the Southern District of Florida, in a statement announcing the sentencing. “Those who use kickbacks and other illegal activity to bilk taxpayer dollars from vital public programs will be held accountable,” he said.
“Billing healthcare programs for medically unnecessary medications not only undermines the viability of those programs, it exploits all citizens,” said Cynthia A. Bruce, Defense Criminal Investigative Service Special Agent in Charge, in the announcement. DCIS investigated the case with assistance from FBI Miami, and the Food and Drug Administration’s Office of Criminal Investigation.
Overall, the co-conspirators participated in the scheme to defraud Tricare out of tens of millions of dollars, Justice officials said in an announcement in 2018. Two named co-conspirators employed at the time by Patient Care America are awaiting trial, according to court documents. They are Matthew Smith, a licensed pharmacist and vice president of PCA in charge of non-sterile compounding operations; and Alisa Catoggio, a licensed pharmacy technician and executive assistant to Smith. At least eight additional co-conspirators in the overall case have pleaded guilty to federal criminal charges arising out of the scheme, according to Justice officials. It is not known if any doctors are among those.
In addition, Monty Ray Grow, 49, of Tampa, a former college and professional football player, was convicted by a jury in 2018 of 18 criminal charges in connection with the case, including conspiracy to commit health care fraud, conspiracy to pay and receive health care kickbacks, money laundering and others. Justice officials said Grow received nearly $20 million in kickbacks. Grow was ordered to pay about $18 million in restitution, and was sentenced to more than 20 years in federal prison.
In October, 2020, an appeals court upheld Grow’s conviction, but sent the case back to the lower court because the sentence exceeded the statutory maximum allowed by the jury’s general verdict.
Tricare’s costs for compounded medications ballooned in 2014 and 2015, causing a budget shortfall in 2015. In the first four months of 2015, the Defense Health Agency spent nearly $1 billion on compounded prescriptions. Aggressive marketing campaigns by some compounded pharmacies directly targeted Tricare beneficiaries to sell them prescriptions such as pain creams, wound ointments and erectile dysfunction medications.
A Tricare policy change that took effect May 1, 2015 called for screening all ingredients in the prescriptions and rejecting any that contained non-FDA approved ingredients.