A Fort Worth pharmacy owner charged with bilking the federal government out of $55 million to support his extravagant lifestyle — one of “private jets, chartered yachts … Lamborghinis and Ferraris,” as one prosecutor put it — went on trial Tuesday before U.S. District Judge Karen Gren Scholer of Dallas.
Richard Hall, a co-owner of two related companies, Rxpress Pharmacy (also known as The Medicine Store Pharmacy Inc.) and Xpress Compounding, is accused of conspiracy, paying kickbacks to marketers and money laundering in connection with billing federal healthcare programs for filling prescriptions for “compounded drugs.” These medications are specially mixed and often exceedingly costly treatments for patients who cannot take mass-produced prescription drugs.
Because compounded drugs are prepared by hand in small batches and because relatively few pharmacies are authorized to make them, a single tube of, say, a compounded pain-relief cream can sell for thousands of dollars.
The jury trial in Judge Scholer’s court is expected to last about two weeks.
Hall is represented by Marlo Pfister Cadeddu of Dallas and John D. Cline of San Francisco.
The Justice Department’s team of prosecutors includes Lee Michael Hirsch of Dallas, Jacqueline Zee DerOvanesian of Miramar, Florida, and Katherine Payerle of Washington, D.C.
According to a federal indictment originally issued in December 2018 and updated in May 2020, Hall and business associates oversaw “a vast network of marketers” who recruited doctors to prescribe compound medications, which Hall’s pharmacies then filled, billing two federal health insurance programs tens of millions of dollars in the aggregate.
Those two federal entities are identified in the indictment as TRICARE, which provides health insurance for active and retired members of the armed services and their dependents and survivors, and a program authorized under the Federal Employees’ Compensation Act to provide workers’ compensation benefits for federal employees injured or killed on the job.
Many of the prescriptions were filled — and ultimately paid for by taxpayers — “whether anybody wanted them, whether anybody needed them, whether anybody even used them,” DerOvanesian told jurors in the government’s opening statement.
She said Hall and his associates induced doctors — who are not identified in the indictment — to prescribe their costly compounded medications by wining and dining the physicians, flying them by private jet to Cabo San Lucas, Mexico, and arranging for them to meet celebrities at red-carpet events.
Hall spent profits reaped from the illegal scheme, DerOvanesian told jurors, on “private jets, chartered yachts,” expensive vacation getaways, “Lamborghinis and Ferraris.”
A former business partner of Hall’s, the first government witness called to the stand Tuesday, said their companies sometimes raked in $1 million or more a day, “sometimes three or four days in a row,” through illicit billing practices.
“We conspired in the pharmacy to target TRICARE with very expensive compounds,” Scott Schuster told the jury.
Schuster — who identified himself as a co-owner of the Fort Worth pharmacies along with Hall; Hall’s father, longtime Fort Worth pharmacist Lewis Hall; and a fourth partner, Dustin Rall — is testifying under a plea agreement with the government. His testimony will continue Wednesday morning.
Schuster is represented by Richard Roper, a former U.S. attorney for the Northern District of Texas and now a partner with Holland & Knight in Dallas.
Cadeddu, the defense lawyer, said in her opening statement that Hall was innocent. His one “huge, huge mistake,” she said, was to partner with the real crooks — Schuster and Rall.
She acknowledged that Hall’s pharmacies were lucrative — very much so — but noted there’s no crime in that.
“Making money, even a lot of money, is not against the law in this country. … That’s the whole point of American business,” she told the jury.
Cadeddu added that Hall sought and received legal advice from “some of the best lawyers in the country at some of the biggest law firms in town” and was assured that he was operating within the law. At least some of those lawyers and law firms will likely be identified during trial.
Like Schuster, Rall has pleaded guilty and is co-operating in the prosecution of Hall.
So are others. The original indictment named Hall and seven other defendants. Six, including Schuster and Rall, are identified by the government in court records as potential witnesses against Hall — a sure sign they’ve cut plea deals. Only one co-defendant, Quintan Cockerell, identified as a marketer for Hall’s enterprises who lives in Los Angeles County, California, remains an active, non-cooperating defendant in the case. He is in line to be tried later in Judge Scholer’s court.