What the government calls a massive healthcare scam involved nothing more than legitimate business transactions between doctors and the operators of three North Texas pharmacies, defense lawyers told a federal court jury on Thursday.
Four people – a surgeon, a pharmacist, the pharmacist’s brother and the brother’s stepson – face various charges of conspiracy, healthcare fraud, money laundering and tax evasion in a trial over which U.S. District Judge Sam A. Lindsay of Dallas is presiding. Opening statements took place Thursday, after two days of jury selection.
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 spellings of their surname after immigrating to the United States.)
James Noryian operated 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, is represented by Jeff King of Dallas and Philip D. Ray of Frisco.
— Christopher Rydberg of Tarrant County, Noryian’s stepson and an executive with the pharmacies who’s also involved in related family business ventures. Rydberg is represented by Barry Sorrels and Stephanie Luce Ola of Sorrels Ola in Dallas.
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.
In all, a federal health insurance program administered by the Office of Workers’ Compensation Programs, a part of the U.S. Department of Labor, was billed about $196 million for fraudulently dispensed prescriptions between 2014 and 2017, far more than the $158 million alleged in the 2019 indictment, prosecutor Ethan Womble told the jury.
The brothers and Rydberg, Womble said, laundered their ill-gotten gains through a series of money transfers; then lied to the accountants preparing their federal income tax returns and submitted supposed documentation of phony business expenses so their taxes “wouldn’t eat into their massive profits.”
“Why did they do it?” Womble said. “Simple. Money.”
Jeff Kearney, in his opening statement, disputed the government’s contention that his client, James Noryian, bribed doctors to write prescriptions and send them to his pharmacies to be filled.
Rather, he said, the payments Noryian made to doctors including Taba were loans, secured by promissory notes.
“James did not pay kickbacks to Dr. Taba,” Kearney said. “He facilitated loans to Dr. Taba.”
Womble said the “loans” to Taba were a way to disguise hundreds of thousands of dollars in kickbacks. The indictment describes the promissory notes Taba signed as a “sham… to make it appear as though the payments were loans instead of payments for prescriptions.”
Sorrels said his client, Rydberg – described by Womble as “the money guy” – was merely the innocent signer of checks and other business documents for his stepfather. Everything he did in connection with Noryian’s business interests was done under one of two circumstances: “He either asked for approval from James, or James told him to do it,” Sorrels said.
Ray described his client, Taba, as a dedicated surgeon, husband, and father of four who borrowed money from Noryian, a fellow emigrant from Iran, because he was having “cash-flow problems” stemming from an unrelated civil suit, water damage to his home, and the expansion of his orthopedic medical office.
The indictment says Taba referred more than 3,500 prescriptions to Noryian’s pharmacies, resulting in about $33 million in insurance billings to the government.
Ray said the evidence will show that many of those prescriptions were not signed by Taba. “They were modified, they were altered, and they were forged,” the lawyer said.
Gibson, the lawyer for David Nourian, reserved his opening statement.
The prescriptions at issue were for so-called “compound drugs,” boutique medications specially created for the unique needs of an individual patient. Because they’re a specialty product made in small batches, and because compounding requires special training and equipment, the medications can be astronomically expensive. 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.
Womble, the prosecutor, told jurors they will hear testimony from an orthopedic surgeon from Ennis, Kevin Williams, who pleaded guilty in July 2019 to one conspiracy charge in connection with the case and is cooperating the government. According to government documents, Williams took payoffs – sometimes delivered in parking-lot meetings with Rydberg – for more than 10,400 prescriptions, resulting in $90 million in insurance billings.
A third doctor indicted in the case, Leslie Benson of Waco, died last June at age 69.
The trial is expected to last four to five weeks.
Because of concerns about COVID – concerns that repeatedly delayed the trial beginning in 2020 – Judge Lindsay is not allowing spectators into his courtroom in the Earle Cabell Federal Building. They may watch it via closed-circuit TV in an auxiliary courtroom on the 14th floor of the building.