Eleventh Circuit Affirms Convictions Against Florida Physician, Pharmacist for Violating Anti-Kickback Statute

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Reprinted with permission from Birmingham Medical News (Published June 2022)

Prosecutions related to the submission of claims to Tricare for compounded pain creams continue. The Eleventh Circuit Court of Appeals affirmed convictions against a Florida pharmacist, physician, and Navy veteran for their involvement in a federal kickback scheme related to prescribing compounded pain creams.

Larry Howard, a pharmacist, Nicole Bramwell, MD, a physician, and Raymond Stone, a retired Navy veteran turned cream-salesman were all found guilty in a jury trial on a seven-count indictment. The three were charged with Anti-kickback Statute violations stemming from reimbursements paid by TRICARE, the federal health benefits program for military service members. Howard was also indicted on two counts of money laundering in connection to the kickback funds. While Howard and Stone were sentenced to over thirteen years and two years in prison, respectively, a lower court sentenced Bramwell to three years of probation, including one year on house arrest. Howard, Bramwell, and Stone all appealed their convictions claiming insufficient evidence beyond a reasonable doubt that each participated in the kickback scheme. Howard also appealed the money laundering convictions by the same standard.

According to the Eleventh Circuit opinion, delivered by Circuit Judge Ed Carnes, during a 14-month period between April 2014 and May 2015, Howard paid Bramwell $138,500 to write cream prescriptions to patients referred to Howard's pharmacy by Stone. Howard paid Stone about $20,000 for his referrals. Howard's pharmacy--Fertility Pharmacy in Winter Springs, Florida--garnered nearly $4.4 million in revenues tied almost entirely to pain cream prescriptions. TRICARE reimbursed $9,400 on average per prescription during that period--amounts so astronomical, they drove Howard to shift his aptly named Fertility Pharmacy from selling fertility drugs, to selling almost 90 percent compounded creams, according to the opinion.
Howard attracted patients to his pharmacy through direct mail marketing, sending flyers to patients advertising free evaluations conducted by "Tricare Wellness," a call center Howard created which was unaffiliated with TRICARE, but which asked questions about patients' health and military status to determine potential interest in or need for his compounded creams. Information for patients who call center employees determined were TRICARE beneficiaries was recorded and delivered to Bramwell, who called patients and delivered to them cream prescriptions to be filled only at Fertility Pharmacy. She also ran a no-cost weight loss program under the "Tricare Wellness" brand, prescribing those patients the costly creams. In at least one instance, Bramwell even filled cream prescriptions for a patient's wife, whom she had never evaluated, garnering over $131,500 in TRICARE reimbursements for three months' worth of one couple's cream prescriptions. In exchange, Howard paid Bramwell in fluctuating amounts that correlated with the reimbursement amounts paid by TRICARE. Over 14 months, Bramwell wrote 394 prescriptions, totaling over $3.5 million. Seven other physicians wrote the remaining compounded prescriptions during that time period.

Patients also came through Fertility Pharmacy via Stone, who falsely advertised himself as a submarine veteran who had been a Lieutenant Commander in the Navy. Stone--a Navy veteran who, at the time of his discharge, was at the second-lowest pay grade--also worked as an alkaline water machine vendor and captured the attention of TRICARE beneficiaries with the promise of a free water machine. Once hooked, Stone referred the patients to Bramwell and other physicians, who would write compounded cream prescriptions. In some instances, Stone told patients that a doctor's prescription was required for a water system. While Stone and Howard paid for those water systems themselves, Stone received a $1,000 to $1,400 commission for every machine "gifted" to a patient. Both direct payments to Stone for patient referrals, and payments for the alkaline water machines, amounted to kickbacks found the Court.

TRICARE issued a new policy in March 2015 that took effect in April 2015, limiting the reimbursements for compounded cream subscriptions. As a result of the new policy, reimbursements for compounded creams fell by 98 percent, from $480 million to $10 million. Bramwell stopped writing prescriptions for compounded creams in June 2015 and Howard stopped paying Stone.

In his opinion, Judge Carnes, affirming all convictions, pointed to the above detailed facts as evidence sufficient to support convictions against Howard, Bramwell, and Stone. Judge Carnes called Bramwell "the lynchpin in the scheme that was making [Howard] wealthy," and noted that evidence such as checks labeled "Finder Fee" and a pharmacy employee's testimony that Stone got paid for every patient he referred offered proof of kickbacks paid and received. The Court also affirmed the money laundering convictions against Howard, stating his argument "necessarily fail[ed]" after affirming the kickback convictions.

The Court also agreed with the government on cross-appeal that Bramwell's three-year probation was too lenient a sentence in light of the advisory guidelines, which recommended 78 to 97 months in prison. The lower court characterized Bramwell as a victim in Howard's scheme, noting her lack of criminal history and positive reputation in the community, and determined that sentencing Bramwell to a prison term would not serve as a deterrent to criminal behavior. Moreover, the lower court considered that imposing a felony on Bramwell would result in the permanent loss of her physician license. Considering the list of sentencing factors set forth in 18 U.S.C. § 3553(a), Carnes determined the lower court committed an abuse of discretion in its sentencing determination as to Bramwell, citing its failure to consider relevant factors, including improperly judging deterrence, giving significant weight to an improper factor, namely loss of her physician license, and committing clear error of judgment in affording significant weight to her pre-crime history and reputation as opposed to her involvement in the kickback scheme. The Court also noted the significant disparity in sentencing between Bramwell and Howard, who "played a far less important role than she did, and profited only a fraction as much." The Court vacated Bramwell's sentence and remanded the judgment to the district court for reasonable sentencing, which it defined only as "a non-token period of incarceration."

Jim Hoover is a partner at Burr & Forman LLP and works exclusively within the firm's Health Care Practice Group and predominantly handles healthcare litigation matters.

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