Tricare fraud case heats up; defense queries key witness
Testimony in the insurance fraud case of Alexander doctor Joe David May grew heated in federal court Tuesday as May’s attorney, Shelly Koehler of Fayetteville, tried to poke holes in the testimony of one of the prosecutors’ main witnesses.
Derek Clifton, a former Baxter County basketball coach who went into medical sales in 2011, testified for more than three hours Tuesday, outlining for jurors the development of the fraud scheme that bilked Tricare, the nation’s military insurer, out of millions of dollars in Arkansas in 2015.
Clifton described how the insurer was billed for medically unnecessary compounded medications for beneficiaries in an assembly-line type process that raked in hundreds of thousands of dollars in commissions to a handful of pharmaceutical salespeople and kickbacks to doctors and Tricare beneficiaries before the scheme was uncovered.
Nationwide, losses to Tricare from fraudulent prescriptions equaled more than $2 billion before the FBI began looking into the various schemes around the country sometime in 2015.
Clifton, who was charged alongside May with numerous criminal counts — including wire fraud, identity theft, making false statements, falsifying records to impede an investigation and violating the federal anti-kickback statute — pleaded guilty in November 2020 to violating the federal anti-kickback statute and was sentenced last year to 51 months in prison. He was escorted into the courtroom Tuesday afternoon in an orange jumpsuit, shackles and leg irons by federal marshals.
Clifton testified that he was
brought into the scheme by Albert Glenn Hudson of Little Rock, a co-conspirator who pleaded guilty in June 2020 to one count of violating the anti-kickback statute and who testified last week for the prosecution.
“He said there was a new opportunity that he had been doing for a little while,” Clifton said. “He kept emphasizing that this company, Medworx, had a contract with Tricare that was exclusive. He kept telling me all the ins and outs of it, how it was legal and just a really great opportunity.”
Clifton said Hudson told him it was a good opportunity to make money by selling compounded prescriptions.
“I was led to believe it was lucrative,” Clifton said while being questioned by Assistant
U.S. Attorney Stephanie Mazzanti. “But after the first month I found how lucrative … It was a weird deal.”
The products involved were pain creams, scar creams, vitamin supplements and other products that cost Tricare upwards of $15,000 per prescription and often wound up costing more than $50,000 a month for multiple products, which were prescribed by providers that prosecutors said never saw the patients they were prescribing for.
Clifton’s answers grew vague when he was asked about what kind of agreement he and May entered into and when answering questions about who had filled out the pre-filled prescription forms May is accused of signing.
“There was never an agreement — I’ll do this; I won’t do this — type situation,” he said. “It was, ‘Hey, here’s some people who would like these type products.’” I remember him looking at the products and saying these are nothing more than a combination of, I think he said over-the-counter products, that ‘These are safe and I have no problem with it.’”
Clifton said May never told him he would sign off on all prescriptions but that, “the first couple, he didn’t have a problem with.”
Mazzanti asked if Clifton, or someone, had filled out the patient information in advance on the prescription forms brought to May.
“Someone did,” Clifton said. “Had you already selected the products to be prescribed?” she asked.
“They were selected,” he said.
On cross examination, Koehler pointed out inconsistencies in May’s signature on prescription forms submitted four months apart, although both signatures were automatically signed through an app called Easy Sign.
“You forged his signature, didn’t you?” asked Koehler. “No,” Clifton replied. “Look at these two signatures,” she said. “They don’t look the same, do they?”
“They don’t look the same,” Clifton conceded.
“The whole point of Sign Easy is you just tap, tap, tap, and you’re done,” Koehler said. “There’s no reason for those two signatures to be different is there?”
“I don’t think so,” Clifton said.
“Other than the fact it came from your Sign Easy account,” she said.
“I don’t remember that,” Clifton said.
Koehler also homed in on Clifton’s claim that in mid-2015, after the Mississippi compounding pharmacy began asking questions about whether the patients being prescribed the compounding medications had actually seen the prescribing doctors, that May had called the pharmacy from the Little Rock Athletic Club where the two men met to play basketball.
“[That] was a long time ago,” Clifton said. “I knew I needed to talk to him about calling the pharmacy so I invited him to play and told him there that he needed to call the pharmacy.”
But after Koehler pointed out phone records indicated May had called the pharmacy twice and had called Clifton 10 minutes after the first pharmacy call, Clifton suggested that May had called the pharmacy en route from Malvern, despite having said moments earlier that he had told May to call the pharmacy after he had arrived in Little Rock.
“Why is he calling you?” she asked. “Couldn’t he just look at you?”
Clifton testified that he gave May cash on three occasions, totaling around $10,000 to $15,000, but under cross examination by Koehler, was unable to provide details other than to say on two occasions he had handed off the cash in the parking lot of a Bryant gymnasium parking lot and a third time at his home.
“Do you just go around giving people thousands of dollars?” Koehler asked.
“I’ve been known to give people thousands of dollars,” Clifton replied.
“But you don’t have specific information about my client?” she asked.
“I don’t,” Clifton answered. Testimony resumes this morning with FBI Special Agent Jill Hudson expected to take the stand.
Assistant U.S. Attorney Alex Morgan told U.S. District Judge Kristine G. Baker that he expects the government to wrap up its case by lunchtime, at which time Koehler will have the opportunity to present May’s defense. It is not known if May himself will take the stand to testify.
The products involved were pain creams, scar creams, vitamin supplements and other products that cost Tricare upwards of $15,000 per prescription and often wound up costing more than $50,000 a month for multiple products, which were prescribed by providers that prosecutors said never saw the patients they were prescribing for.