Two TX Pharmacy Owners Sentenced in Healthcare Kickback Scheme

12.13.2017


By Liz Carey

Austin, TX (WorkersCompensation.com) – Two Texas pharmacy owners were sentenced Friday for their part in a multi-million-dollar kickback scheme the government said bilked the federal government of millions in federal workers’ compensation reimbursements.

US District Judge Sam Sparks sentenced Brian David Haney, the 38-year-old partial owner of Vidor Pharmacy in Austin, and Kevin Michael Gray, the 45-year-old operator of Family Pharmacy, Inc., in Houston, to 28 months in federal prison on bribery and tax violation charges in connection with the kickback scheme.

In April 2016, Gray pleaded guilty to filing false income tax returns and to paying more than $800,000 in kickbacks to Texas chiropractor Garry Craighead, the owner of Universal Treatment Center chiropractic clinics in Dallas, Fort Worth, Killeen, Austin, San Antonio, Corpus Christi, Weslaco and Beaumont, that marketed itself primarily to federal employees, primarily treating US postal workers. In December 2016, Haney pleaded guilty to the same charges.

US Attorney Richard Durbin, Jr. said by pleading guilty, the two men admitted that for two years, up until January 2014, they paid Craighead more than $800,000 for patient referrals of federal employees for their medications, which the federal government would then reimburse the men for as part of its workers’ compensation program. The men falsely identified the kickbacks as consulting fees on their federal income tax forms, Durbin said.

Judge Sparks also ordered that the two men pay a $100,000 fine; pay $6,500 for the cost of prosecution, and be placed on supervised release following their prison terms. Sparks ordered Haney to pay $351,947 in restitution to the IRS. Gray was ordered to pay $245,692 in restitution to the IRS. Sparks ordered that both men pay $813,560.87 to the US Department of Labor. 

According to the Department of Justice, Craighead previously pleaded guilty in December 2015 to “one count of solicitation and receipt of illegal remunerations in the federal healthcare programs, and one count of engaging in monetary transaction in property derived from specific unlawful activity.” He was sentenced in June 2016 and is currently serving a 14-year prison sentence in federal prison. He was also ordered to pay more than $17 million in restitution to the US Department of Labor.

In June, Craighead’s company, UTC, was ordered to pay $3 million to the federal government, to settle civil healthcare fraud allegation. The clinic will also waive claims for payment exceeding $1.6 million and be permanently excluded from participating in federal healthcare programs.

“Today’s settlement reflects our commitment to combatting fraud in the federal healthcare system,” Durbin said in a statement. “We will use all of the tools at our disposal, including civil litigation under the False Claims Act, to ensure the integrity of federally funded programs.”

The sentencing of the two pharmacy owners should be a message to anyone thinking of defrauding the government, those involved with the cases said. 

“Today’s sentencings of Brian Haney and Kevin Gray further shows that IRS Criminal Investigation is working vigorously to stop perpetrators who devise elaborate methods to conceal their fraudulent proceeds from healthcare fraud,” said Acting Special Agent in Charge Troy Caldron, San Antonio Field Office. “Money gained through illegal sources, such as healthcare fraud, is part of the untaxed, underground economy. This untaxed underground economy poses a threat to our voluntary tax compliance system and undermines the overall public confidence in our American system of taxation.”

Daryl Fields, public affairs officer for the Department of Justice Western District of Texas’ office, said the government was pursuing two separate cases against the men — one civil and one criminal. More sentencing of others involved in the scheme are expected, he said.

“(The) investigation is continuing… there are two tracks in play here — a criminal one and a civil one. On the criminal track, there are two defendants that have entered guilty pleas to their conduct in this scheme who still awaiting sentencing,” Fields said via email to WorkersCompensation.com. “On October 5, 2017, Christine Craighead pleaded guilty to one count of payment to a non-licensed physician. She is scheduled to be sentenced on January 5, 2018. On November 9, 2016, Houston pharmacist Nermin El Hadik pleaded guilty to paying over $5.3 million in kickbacks to Garry Wayne Craighead. She is scheduled to be sentenced on June 22, 2018.” 

“On the civil track, there are several lawsuits filed in connection with this investigation including U.S. v. Brian Haney, et al…,” he said. In the case against Haney, the Department of Labor’s Office of Workers’ Compensation has filed suit asking for nearly $3.5 million in restitution.

Representatives of Family Pharmacy and Vidor Pharmacy refused to comment on either the suits or the sentencing.   

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