Tennessee Doctors Plead Guilty in $65 Million TRICARE Fraud

Assistant U. S. Attorneys Benjamin J. Katz and Mark W. Pletcher (619) 546-9604 and (619) 546-9714

NEWS RELEASE SUMMARY – April 11, 2018

SAN DIEGO – Two doctors, Carl Lindblad and Susan Vergot, pleaded guilty in federal court today, admitting that they participated in a health care fraud scheme that bilked TRICARE – the health care program that covers United States service members – out of more than $65 million by prescribing thousands of exorbitantly expensive compounded medications to patients that they never saw or examined.

Drs. Lindblad and Vergot entered their guilty pleas before U.S. Magistrate Judge Mitchell D. Dembin.  Both pleaded guilty to conspiracy to commit health care fraud. Their sentencings are scheduled for June 29, 2018 before U.S. District Court Judge Janis L. Sammartino. 

Compounded medications are specialty medications mixed by a pharmacist to meet the specific medical needs of an individual patient. Although compounded drugs are not approved by the Food and Drug Administration (FDA), they are properly prescribed when a physician determines that an FDA-approved medication does not meet the health needs of a particular patient, such as if a patient requires a particular dosage or application or is allergic to a dye or other ingredient.

According to the guilty pleas, a team of individuals worked to recruit and pay Marines, primarily from the San Diego area, and their dependents – all TRICARE beneficiaries – to obtain compounded medications that would be paid for by TRICARE.  This information was sent to Choice MD, the Tennessee medical clinic that employed Drs. Lindblad and Vergot.  Drs. Lindblad and Vergot then wrote prescriptions for the TRICARE beneficiaries, despite never examining the patients in person.  Once signed by the doctors, these prescriptions were not given to the beneficiaries, but sent directly to particular pharmacies controlled by co-conspirators, which filled the prescriptions and billed TRICARE at exorbitant prices.

Josh Morgan, a former Marine from San Diego, pleaded guilty last month to Conspiracy to Commit Health Care Fraud for his role in recruiting TRICARE beneficiaries to fraudulently receive these prescriptions.

Between December 2014 and May 9, 2015 – the day that TRICARE stopped reimbursing for compounded medications – Drs. Lindblad and Vergot authorized 4,442 total prescriptions.  Over this time, their co-conspirators billed TRICARE $65,679,512 for these prescriptions.

Lindblad and Vergot represent the fifth and sixth defendants charged in relation to this fraud scheme.  In addition to Morgan, Jimmy and Ashley Collins, the owners of Choice MD, and CFK, Inc., the owner of a co-conspirator pharmacy, were indicted in March 2018 on charges of Conspiracy to Commit Health Care Fraud and Illegal Payments of Remunerations.  That case remains pending.

DEFENDANTS                                            Case Number 18-cr-0432-JLS                                            

Carl Lindblad                                                 Age: 53                                   Cleveland, TN

Susan Vergot                                                  Age: 31                                   Cleveland, TN

SUMMARY OF CHARGES

Conspiracy to Commit Health Care Fraud – Title 18, U.S.C § 1349

Maximum penalty: 10 years’ imprisonment and fine of higher of $250,000 or double loss amount

AGENCY

Defense Criminal Investigative Service

Naval Criminal Investigative Service

IRS Criminal Investigation Division, Gulfport, MS

Federal Bureau of Investigation - Jackson, MS Field Office

*The charges and allegations contained in an indictment or complaint are merely accusations, and the defendants are considered innocent unless and until proven guilty.