A judge recently sentenced two veterans for being part of a conspiracy to bilk Tricare, the military’s health care program, out of more than $65 million. Joshua Morgan and Kyle Adams were sentenced to 21 months and 15 months in prison, respectively. (Aspen Reid/U.S. Air Force)
Two veterans convicted for their roles in bilking more than $65 million from U.S. military health insurer Tricare have been sentenced and ordered to pay back millions of dollars, the Justice Department said Friday.
U.S. Marine veteran Joshua Morgan, 31, was sentenced to 21 months in federal prison and ordered to pay $4.4 million in restitution, a federal judge in the Southern District of California said in an order filed in early April.
Former U.S. Navy sailor Kyle Adams, 36, was sentenced to 15 months in prison and ordered to pay $11.5 million, another court order filed in late March said.
Prosecutors say the pair recruited fellow service members to receive expensive medications they did not need or expect to receive in exchange for kickbacks. Meanwhile, other members of the conspiracy wrote bogus prescriptions and faked paperwork to obtain millions in insurance reimbursements.
The fraud was one of many so-called compound medication schemes that put the survival of the health insurer Tricare at risk, prosecutors said.
“Today’s sentencing closes the last chapter on this outrageous fraud scheme that almost put Tricare into bankruptcy,” U.S. attorney Tara McGrath said in a statement Friday.
Morgan and Adams worked as recruiters for Jimmy and Ashley Collins, a husband-and-wife team based in Tennessee.
Service members were paid $300 a month to receive creams and erectile dysfunction pills as part of a “medical evaluation.” The fraud ring would then receive millions in insurance reimbursements, a criminal complaint said.
Morgan, a sergeant in Marine Aviation Logistics Squadron 11, based at Miramar Air Station in California, received $2.6 million for his work as a recruiter for the fraud, a sentencing document said. Adams received $1 million for his work recruiting 88 people.
“It took very little work to sign people up to receive free money,” said Morgan, according to a sentencing document.
He said service members knew the scheme was dubious. Many of his recruits signed up because they desperately needed the extra $300 a month, Morgan said.
As to why Morgan took part in the scheme, he said it was due to his status as a Marine at the bottom of the pay scale, with a large car payment, and that he badly needed the extra money, the document said.
The Marine used his cut of the proceeds on nightclubs and top-shelf alcohol. He bought two luxury cars, which were seized by the government, the sentencing document said.
Adams, another recruiter, conceded he “just went with it” and “turned a blind eye” to the illegality of the scheme due to how much money was coming in, his sentencing document said.
Two doctors, Carl Lindblad and Susan Vergot, and a nurse practitioner, Candace Craven, also took part in the scheme by writing fraudulent prescriptions, the Justice Department said.
A pharmacy that filled the fraudulent prescriptions, CFK, Inc., pleaded guilty in 2019 to a conspiracy to submit false claims.
Jimmy and Ashley Collins, the ringleaders of the scheme, were sentenced in January to a 10-year prison term and 18 months in home confinement, respectively. The couple was also ordered to pay $65 million.
The couple targeted a Tricare billing change that led to inflated costs for compound medications, a practice in which a pharmacist creates a personalized blend of drugs.
These bespoke medications cannot be evaluated like mass-produced drugs, are more expensive and reimbursed at a far higher rate by insurance companies, a statement by the Justice Department said in October.
