On Thursday, a federal jury in Dallas delivered the second half of its verdict in a $100 million Tricare fraud trial that involved six defendants and lasted for two months in U.S. District Judge Barbara Lynn’s court.
The mixed verdict found marketing professional John Paul Cooper guilty of one count of conspiracy to commit healthcare fraud and several counts of violating the federal anti-kickback statute. The jury found Cooper not guilty on two other anti-kickback charges, and was unable to reach a verdict on several other iterations of anti-kickback statute violations.
The jury was unable to reach a verdict on Dr. Walter Neil Simmons, who was charged with only one count of conspiracy to commit healthcare fraud.
The jury found Dr. William Frank Elder-Quintana not guilty of conspiracy to commit healthcare fraud and could not reach a verdict on the other charges brought against him.
All three defendants were involved with CMGRX LLC, a company that primarily produced pain and scar creams on behalf of various compounding pharmacies in-network for Tricare, the health insurance program that serves the U.S. military.
Cooper co-owned CMGRX and co-operated CMGRX with another defendant, Richard Robert Cesario, who pleaded guilty and served as one of the government’s star witnesses during trial. The government alleged Cooper, who served as the company’s president and secretary, paid Tricare beneficiaries for obtaining and filling prescriptions for compounded drugs and disguised the payments as “grants” for participating in a medical study.
The government said Dr. Elder, who worked as a contract physician for CMGRX, accepted payments from Cooper and Cesario in exchange for writing thousands of prescriptions for compounded drugs to Tricare beneficiaries he never met in person.
The government lodged the same accusations against Dr. Simmons, another contract physician who also served as CMGRX’s chief medical officer.
The verdict came late Thursday morning, two days after the jury delivered the first half of its verdict that acquitted three other defendants. More details are below in the original report.
Three Defendants Free, Three Still Waiting: Jury Issues Partial Verdict in $100M Tricare Fraud Trial
(Dec. 18) — After a two-month trial, a federal jury in Dallas took an unusual pause in deliberations Tuesday to announce the acquittal of half of the six defendants who stood trial on charges of a $100 million Tricare fraud scheme brought by the federal government, The Texas Lawbook has learned.
After seven days of deliberation, the jury found pharmacists Jeffry Dobbs Cockerell and Steven Bernard Kuper and Dallas Cowboys player-turned-marketing professional Michael John Kiselak not guilty. Each defendant was charged with one count of conspiracy to commit healthcare fraud and, in the cases of Cockerell and Kuper, multiple counts of violations of the federal anti-kickback statute.
The jurors are still determining the fate of Dr. Walter Neil Simmons, Dr. William Frank Elder-Quintana and John Paul Cooper, who were all involved with CMGRX LLC, a company that primarily produced pain and scar creams on behalf of various compounding pharmacies in-network for Tricare, the health insurance program that serves the U.S. military.
Thirteen individuals were originally indicted in 2016 in the alleged $100 million Tricare scheme. Seven pleaded guilty in deals with the government.
The defendants allegedly conspired to run a scheme to defraud Tricare through kickback payments made by owners of compounding pharmacies to various parties, including Tricare beneficiaries, prescribing physicians and marketers — a fraud that started in May 2014 and continued through February 2016, federal prosecutors stated when the charges were initially announced.
According to the superseding indictment, which was made public in October 2016, Cockerell owned and operated a compounding pharmacy in the Tricare network called 360 Pharmacy Services, which was located in Webster, Texas. The government alleged 360 Pharmacy Services paid kickbacks to Cooper in exchange for sending prescriptions to them.
Kuper owned and operated FW Medical Supplies, a Tricare network compounding pharmacy in Burleson, Texas that did business under the name Dandy Drug. The government alleged Dandy Drug paid kickbacks to Cooper, the president of CMGRX, and defendant Richard Robert Cesario (who took a plea deal) in exchange for referring prescriptions to them.
Kiselak led marketing groups for CMGRX that recruited military members and their families to participate in a compound pharmaceutical study in exchange for money. The indictment accused Kiselak and others of offering to pay — but not actually paying — Tricare beneficiaries for obtaining and filling various prescriptions for compounded drugs.
The government alleged that the defendants disguised payments to Tricare beneficiaries as “grants” for participating in a medical study. In reality, the study was not approved by Tricare, was not overseen by a qualified physician or medial professional, had no control group and was not designed to gather any useful scientific data relating to the safety and efficacy of any drug, the government said.
Cockerell’s lawyers are Houston attorneys Jim Lavine of Zimmermann Lavine & Zimmermann and Sean Buckley of Sean Buckley & Assoc. Kuper was represented at trial by Jeffrey Ansley and Arianna Goodman of Bell Nunnally & Martin in Dallas. Kiselak is represented by Dallas attorney Nicole Knox.
The government’s trial team was led by Assistant U.S. Attorneys Douglas Brasher, Ryan Raybould and Renee Hunter.
The Texas Lawbook will publish a more detailed article when the jury returns its full verdict.
Editor’s Note: Litigation writer Natalie Posgate is married to an attorney at Bell Nunnally who is not involved in this case.