Crime

Two Charged in Multi-Million Dollar Compounding Pharmacy Fraud Scheme

Jason May, 40, of Lamar County, Mississippi, and Gerald Jay Schaar, 46, of Biloxi, Mississippi, have each been charged by Criminal Information for their roles in a multi-million dollar compounding pharmacy health care fraud conspiracy, announced Acting U.S. Attorney Harold Brittain, FBI Special Agent in Charge Christopher Freeze, IRS-Criminal Investigation Special Agent in Charge Jerome R. McDuffie, and John F. Khin, Special Agent in Charge, Defense Criminal Investigative Service Southeast Field Office.

The charges were brought as a result of the largest ever national health care fraud enforcement action by the Medicare Fraud Strike Force, involving 412 charged defendants in 41 federal districts across the country, targeting schemes which involved billing Medicare, Medicaid, and TRICARE (a health insurance program for members and veterans of the armed forces and their families) for medically unnecessary prescription drugs and compounded medications that often were never even purchased and/or distributed to beneficiaries.

May is charged with conspiracy to commit health care fraud and money laundering in connection with his role as co-owner and pharmacist in charge of Advantage Pharmacy, which received approximately $192 million in reimbursements from TRICARE and other health care benefit programs for compound topical creams. According to the Criminal Information, May selected formulas for the compound creams based on reimbursement rates as opposed to medical efficacy. In order to facilitate the scheme to defraud, May and Advantage Pharmacy either did not collect patient copayments for the compound topical creams or paid copayments on behalf of beneficiaries. As a co-owner of Advantage Pharmacy, May received a portion of the reimbursements associated with the fraudulently obtained compound creams and transferred certain of those proceeds from the fraud – in transactions greater than $10,000 – into a money market account held in his name.

Schaar is charged with conspiracy to commit health care fraud for his role in a fraudulent scheme in which he, acting as a marketer for a pharmacy located in Lamar County, solicited physicians and other medical professionals to write prescriptions without seeing patients for compound topical creams dispensed by the pharmacy. According to the Criminal Information, Schaar, together with others, later falsified patient records to make it seem as though medical professionals had examined the patients who received prescriptions for the compound creams. In total, the pharmacy received $2.3 million in reimbursements for the prescriptions solicited by Schaar.

Jason May and Gerald Jay Schaar are both scheduled to enter guilty pleas before U.S. District Judge Keith Starrett on July 25, 2017, at 1:30 p.m.

This case is being prosecuted by Department of Justice trial attorneys Dustin Davis and Katherine Payerle and Assistant U.S. Attorney Mary Helen Wall. The case is being investigated by the FBI, IRS-Criminal Investigation, Defense Criminal Investigative Service, Health and Human Services Office of Inspector General, Mississippi Bureau of Narcotics, and other government agencies.

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