One of the biggest healthcare fraud cases in Texas, described by authorities as a bribery and kickback scheme by doctors, pharmacies and others to bilk the U.S. government out of $158 million, goes to trial Tuesday before a federal jury in Dallas.
Four Texans – a surgeon, a pharmacist, a pharmacy owner and one of his business associates – face various charges of conspiracy, healthcare fraud, money laundering and tax evasion. U.S. District Judge Sam A. Lindsay is presiding.
The defendants are:
– Jamshid (James) Noryian of Travis County and Dehshid (David) Nourian of Collin County, brothers identified by investigators as the architects of the scam. (Of Iranian descent, the two adopted different English-alphabet spellings of their surname after immigrating to the United States.)
James Noryian owned three pharmacies in Tarrant County. David Nourian held management positions at his brother’s pharmacies and was pharmacist-in-charge at two of them. James Noryian is represented by Jeff Kearney and Catherine Stanley of the Kearney Law Firm in Fort Worth, David Nourian by Michael P. Gibson of Burleson Pate & Gibson in Dallas.
– Michael Taba, a Plano orthopedic surgeon represented by Jeff King of Dallas and Philip D. Ray of Frisco.
– Christopher Rydberg of Tarrant County, an executive with Nouryian pharmacies who’s also involved in other family business ventures. Rydberg is represented by Barry Sorrels and Stephanie Luce Ola of Sorrels Ola in Dallas.
In a nutshell, the pharmacy defendants are accused of paying (and the surgeon of accepting) bribes and kickbacks for thousands of costly prescriptions fraudulently written for federally insured government workers (among others) who were ostensibly being treated for on-the-job injuries or work-related illnesses.
“These prescriptions, as defendants knew and intended, were, among other things, not legitimately prescribed, not needed, not used, and induced through the payment and receipt of kickbacks and bribes,” according to a Sept. 11, 2019, indictment.
The prescriptions were for so-called “compound drugs,” boutique medications created, as the U.S. Food and Drug Administration explains, by “combining, mixing, or altering ingredients to create a medication tailored to the needs of an individual patient.” Compound drugs are typically prescribed when a patient can’t take conventional FDA-approved drugs: for example, if the patient is allergic to some ingredient in the usual medication.
Because compound drugs are made in small batches, sometimes to meet the unique needs of a single patient, and because compounding requires special training and equipment, the products can be astronomically expensive – and billing health insurers for them can be wildly lucrative.
The government’s reimbursement rate for a single tube of a compounded cream made at Noryian’s pharmacies, supposedly for treating scars, wounds and pain, could be as much as $28,000, the indictment said.
Noryian bragged to acquaintances “that he made $1 million a day off the compounded medications,” it said.
Prosecutors will try to convince jurors that Noryian’s boast was emblematic of a ravenous greed that blinded the defendants to any regard for patient care, or for the law. A theme running through the grand jury’s 28-page, 16-count indictment is that the accused seemed driven to churn out, and cash in on, as many high-dollar prescriptions as possible.
Noryian and Nourain, the indictment suggested, weren’t content merely to obtain prescriptions by bribing doctors who treated federal workers; they also hired a physician’s assistant to sign compound-drug prescriptions for employees of their own pharmacies, then submitted “$400,000 in false and fraudulent claims” for filling those prescriptions to Blue Cross Blue Shield, the private group-plan insurer for the pharmacies.
The physician’s assistant “did not examine nor treat the employees,” who “did not want, need, or request the medications and sometimes did not even know medication had been prescribed for them.”
Noryian made employees of his pharmacies “contact patients and doctors and request refills” when the number of prescriptions coming in took a dip.
Taba, the Plano orthopedist, instructed his staff to tally at the end of each day the number of patients he’d seen , then “write prescriptions for compounded creams for each patient,” the indictment said.
“The medications,” it went on, “were not tailored to the individual patient” – the whole point of a compounded drug. Instead, “every patient got the same medications.”
Taba, according to government records, sent more than 3,500 prescriptions Noryian’s way, resulting in insurance billings of about $33 million.
He wasn’t the only doctor caught up in the government’s investigation.
The four defendants facing trial next week are among nine people – including three doctors – who were charged in the case, either though the September 2019 indictment or an earlier version issued March 22, 2017.
One indicted doctor, Kevin Williams, an orthopedic surgeon from Ennis, pleaded guilty in July 2019 to one conspiracy charge and agreed to cooperate with prosecutors. According to government documents, Williams took payoffs – sometimes delivered in parking-lot meetings with Rydberg – for prescribing compounded “wound and scar medications when patients did not need the medications because they had not had surgery and were not planning to have surgery.”
He specified that his prescriptions could be refilled eleven times, according to the indictment, bestowing upon Noryian gifts that kept on giving.
Williams, the government contends, wrote more than 10,400 prescriptions, resulting in $90 million in insurance billings.
The third indicted doctor, Leslie Benson of Waco, died last June at age 69. An occupational-medicine specialist, Benson owned three clinics serving injured federal workers. In exchange for under-the-table payments from Noryian, including free rent, Benson wrote “medically unnecessary … prescriptions for compound medications for all patients, regardless of whether they wanted or needed the medications,” the indictment said.
He sent almost 4,000 prescriptions to Noryian’s pharmacies, generating about $20 million in insurance billings to the government, records show.
One defendant, identified as Ali Khavarmanesh, a Tarrant County pharmacy owner, is a government fugitive.
On Tuesday, Judge Lindsay granted unopposed government motions to dismiss charges against Noryian’s elderly mother and his sister, a dentist in Plano.
Earlier, Lindsay said he thought the trial would take six to eight weeks. However, the last-minute removal of two defendants ought to simplify the proceedings, and one criminal defense attorney familiar with the case said five weeks may be a better estimate.