Desiree Ford rubbed the pain cream on her skin and immediately wanted to wash it off.
“Whoa … time for a shower, this lotion is making me feel weird,” she texted a friend.
The 22-year-old Houston woman was later found dead in her bathtub by her mother.
The Harris County medical examiner ruled that Ford’s November 2014 death was caused by toxic effects of two drugs in the pain cream she used, which came from a Houston compounding pharmacy called Diamond Pharmacy.
The doctor who prescribed it, Michael Kelly, never talked to or examined Ford. But he did take a kickback for writing the script, prosecutors said. Kelly and four others connected to the pharmacy were convicted of fraud in federal court in Houston for the $17 million scheme.
Kelly, 71, who surrendered his medical license, died earlier this year before he could be sentenced.
Federal prosecutors are bringing similar fraud cases against doctors, pharmacies and marketers from Dallas to Houston to the border. The feds say they bilked taxpayers out of millions of dollars and endangered patients with the dubious creams, some costing as much as $28,000 per container.
The cases reveal a pattern: Pharmacy owners and marketers paid kickbacks and bribes to doctors for writing bogus prescriptions for unneeded pain and scar creams. They handed out gift cards, food and money to Medicare, Medicaid and Tricare beneficiaries to get them to sign up for the creams. Refills were automatic. Some of the creams contained addictive and hallucinogenic drugs like ketamine.
“We’re constantly chasing it,” said Michael Cohen, operations officer for the investigations branch of the Department of Health and Human Services’ Office of Inspector General. “They form it almost like a pyramid scheme. And everyone’s being paid a kickback.”
Two active North Texas cases allege a combined fraud of over $180 million. In one of the cases, Fort Worth’s Ability Pharmacy spent about $15 per container and then charged the government $28,000 for it, according to federal agents and prosecutors.
Everyone got the same creams from the pharmacy regardless of whether they wanted or needed them, prosecutors say. Some didn’t have wounds or scars to treat, according to court filings.
Ability Pharmacy’s owner boasted of making $1 million per day from the compound medications, federal authorities say.
“This is yet another shocking example of how unmitigated greed can spawn a fraud so brazen that it almost takes your breath away,” John Parker, the U.S. attorney in Dallas, said of the case in March. “I would suggest that the costs of playing these games far outweigh whatever short-term gains are realized, no matter their size.”
Statewide, as many as 28 people have been arrested in pain cream schemes, which have racked up at least $200 million in fraudulent billings, authorities say. In most cases, Medicare, Tricare, workers’ compensation and other government insurance programs paid the tab.
Compounding pharmacies tailor certain drugs to individual patients, usually in small batches, by altering dosages, mixing medications and converting pills into liquids, for example. It’s supposed to be a specialty industry for the odd case here and there. But some pharmacy owners turned the pain creams into a big-time moneymaker, authorities say.
Richard Ford, Desiree’s father, said no one could show how much ketamine was put into her pain cream. The powerful anesthetic was mixed with cyclobenzaprine, a muscle relaxant, court records show.
“Whatever it was, it happened fast with her,” he said, noting that she stopped communicating within an hour.
Ford said officials told him Kelly and Diamond Pharmacy’s owners shredded some medical records and falsified others, some of which indicated he also had been to see Kelly, complaining of back and neck pain. It never happened, he said.
“They’re just scrambling to make notes to try to make a paper trail,” said Ford, noting they got his weight and birth date wrong.
Ford, who is suing Diamond Pharmacy and its owners, said they opened a new pharmacy after the Food and Drug Administration shut them down, even after they learned about a death linked to their product. “They’re just terrible people,” he said.
The Coalition Against Insurance Fraud says each container of pain cream can contain up to 10 different drugs, such as powerful anti-inflammatories and muscle relaxants. But studies show they aren’t necessarily effective in topical creams. More troubling, the nonprofit said, is the lack of safety data on possible drug interactions.
Some of the creams contain drugs that can cause “central nervous system depression or cardiac effects,” according to the nonprofit Institute for Safe Medication Practices in Pennsylvania.
Cohen, the Office of Inspector General official, said topical creams are easy to make and the reimbursements are high.
That’s because pharmacies figured out they can charge for each medication in the cream.
The military’s healthcare system, Tricare, stopped paying for the creams in 2015 because of the cost. But Cohen said there is still some narrow legitimate medical use for the creams, which unethical pharmacists and doctors have exploited. And they keep changing the drugs they put in compounds, he said.
Desiree Ford’s death after using the cream is not an isolated case.
A California baby died in 2012 after accidentally ingesting a compound cream from his mother’s skin. Prosecutors said the 5-month-old’s death was linked to a kickback scheme involving the doctor who prescribed it. He was indicted in California in 2014 along with a pharmacist and other healthcare workers. The case hasn’t gone to trial.
Cohen said it can be dangerous for doctors to prescribe medications for people with whom they don’t have a medical relationship. Doctors, he said, need to review a patient’s existing medications to check for possible adverse drug interactions.
“The bottom line is greed,” Cohen said. “They make so much money off this, it could be their full-time job.”
‘Through the roof’
Jamshid “James” Noryian, 59, of Austin is accused of being the mastermind behind Ability Pharmacy’s alleged scheme, which resulted in the indictment of eight people in Dallas in March, including some of his relatives. He also owned Park Row Pharmacy in Arlington and Industrial & Family Pharmacy in Fort Worth, authorities say.
One of his pharmacists is accused of using ingredients in the creams that would yield the highest reimbursements from government health programs. As Noryian put it, the reimbursement rate for compound pain creams was “through the roof,” according to a federal search warrant.
Noryian has pleaded not guilty. His attorney declined to comment.
Three North Texas doctors also were indicted, responsible for a combined $143 million worth of billings from the Noryian pharmacies, prosecutors say.
About $90 million of that came from Kevin Williams, 47, a Waxahachie orthopedic surgeon, the indictment said.
Williams earned $1 million a month in kickbacks for writing prescriptions for compound creams and patches, prosecutors allege in court records. The chief financial officer for the pharmacies, who also was indicted, handed Williams checks in parking lots and other locations, according to the indictment.
Williams’ attorney, Michael Elliott, said that the allegations are false and that his client prescribes “medically necessary” compounded drugs.
“We’re looking forward to our day in court,” he said.
When Michael Taba, 52, an orthopedic surgeon from McKinney, didn’t write enough prescriptions, Noryian called him to find out why, prosecutors say.
His attorney, Joe Kendall, said “that didn’t happen.” He said he has a good defense for his client that he will reveal during the trial, scheduled for next summer.
An office manager in Dr. Leslie Benson’s Fort Worth office saw pain cream claims as high as $30,000 and “thought it had to be a joke,” according to a federal seizure warrant.
The manager told agents that once Benson’s prescriptions were filled, Ability Pharmacy put the patients on auto-refill, the warrant said. And Benson, 63, of Waco, told another manager to write a pain cream prescription for every patient, some of whom were already taking strong pain medications for their conditions, according to the seizure warrant.
Benson’s attorney declined to comment.
Bledsoe Martin, a postal service employee in Georgia, said his doctor prescribed him pain cream from Park Row Pharmacy. When it arrived in the mail, his wife rubbed it into his back for a work injury.
“It wasn’t a miracle cream that they told me it was. It seemed to help some,” he said. “I don’t know if it was the cream or my wife massaging it into my back. It felt good but it didn’t last long.”
Money and freebies
San Antonio resident Holly Blakely was charged in July with healthcare fraud and other counts for a similar conspiracy to pay kickbacks to doctors for referring patients to certain compounding pharmacies.
In that alleged scheme, patients were easier to find.
The conspirators submitted pain and scar cream prescriptions for themselves, their families as well as friends and neighbors, according to the federal indictment. They also sometimes forged doctors’ signatures on the prescriptions, according to the indictment.
The kickback and bribe payments were disguised as “consulting agreements,” the indictment said. But Blakely is the only one charged.
Her attorney, Robbie L. Ward, said the government is going after a single mom because she is “the low hanging fruit” while the pharmacies that profited from the scheme avoid charges.
“She was just a pharmacy rep,” Ward said. “It’s a really, really sad situation for people who were doing what their employers were telling them to do.”
Daryl Fields, spokesman for the U.S. attorney for the Western District of Texas, said the investigation continues. “We do not comment on our prosecutorial decision-making process,” he said.
The biggest pain cream fraud case in Texas so far involves Trilogy Pharmacy, formerly of Dallas, which is accused of scamming the government out of $100 million. The owners, their marketers and two physicians are among 12 people who were charged last year. Some have already pleaded guilty and are likely to testify against their co-defendants.
They are accused of selling soldiers expensive compounded products like pain and scar creams that were not needed. The top marketing tool was a “sham medical study” in which hundreds of soldiers at or near Fort Hood were paid for getting compounded drugs, including migraine creams and vitamins, through their Tricare prescription benefits, the indictment said.
The study’s real purpose was to compile a list of Tricare beneficiaries with prescriptions so that the defendants could calculate how much to pay them, prosecutors say. The defendants created a phony charity called the “Freedom From Pain Foundation” to disguise the source of the kickbacks, authorities said.
According to a different indictment this year near the border, free food and drinks were enough to generate about $1.5 million worth of bogus prescriptions.
Employees of Penitas Family Pharmacy near McAllen specifically targeted city and school district employees for an array of pain patches and scar creams, according to the indictment.
Omar Espericueta, the owner, and his marketer, Oscar Elizondo, organized the free dinners for the employees to get them to accept the free creams and patches from his pharmacy, according to prosecutors. They then allegedly paid a doctor to write the bogus prescriptions.
Both men were indicted in July on healthcare fraud charges as well as other counts. Their lawyers could not be reached.
Tamara Mitchell, 50, Diamond Pharmacy’s co-owner, was convicted of wire fraud and drug charges by a Houston jury in 2016 and is serving a 14-year federal prison sentence. The judge heard evidence of Desiree Ford’s death before issuing the sentence. Also convicted in the case was a pharmacist, Joyce Ann Gilmore-James, who received two years in federal prison.
Eric Endicott and his wife, Kim, were among the witnesses who testified against Mitchell at her trial. He said Mitchell used their personal information to rack up huge bills for pain cream they never wanted.
The pharmacy billed insurance companies more than $43,000 for creams provided to The Woodlands couple, according to plea documents in the case.
Endicott said one of his wife’s clients at a hair salon introduced her to the cream, which came in small cylinders. “I had no idea they were charging my insurance,” he said. “I never signed for anything. … My wife thought they were samples.”
He said his wife used the cream once. She was not impressed. Endicott said he never met or spoke to Kelly, who prescribed it. “The pharmacy just took our names and ran with it,” he said. “I was livid. I had no idea.”
The judge who sentenced Mitchell said it was one of the worst cases of fraud she had seen in 22 years on the bench. Endicott agrees.
“It was very clear from the get-go that this pharmacy was taking advantage of people and using their information to charge the insurance company,” Endicott said. “They’re taking advantage of hardworking people. These people belong in jail.”
Ford, a firefighter, gave a victim impact statement during Mitchell’s sentencing.
“None of it brings Desiree back, but maybe word will get out and companies like this will do the right thing,” he said.
“She had her whole life ahead of her. I will never get to do so many things — walk her down the aisle, be a grandfather.”