The owner of a local firm that marketed compounding creams has been indicted by a federal grand jury.
Michael Chatfield appeared on Friday before Federal Magistrate Judge Chris Steger. He pleaded not guilty and was allowed to be released on bond.
The indictment for health care fraud and money laundering comes after another employee of the same firm was sentenced earlier this month to serve 65 months in federal prison for wire fraud.
Kirstin Green, a sales rep for Top Tier Medical, was sentenced by Judge Sandy Mattice.
Green in 2014 was a sales representative for the firm located in Hamilton County. He marketed various prescription topical creams dispensed by pharmacies.
Prosecutor Perry Piper said the creams were billed to insurance companies at an exorbitant cost. He said Top Tier engaged in a scheme to defraud by deliberately marketing the topical creams to people with certain insurance companies that would pay for compounded creams, including Blue Cross Blue Shield and Tri-Care. He said if an insurance company would not reimburse a pharmacy for a compounded cream, the sales force would not attempt to write prescriptions for customers with those insurance companies.
Also, Top Tier did not accept cash from the customers for the creams. Top Tier sales representatives solicited customers to sign up to receive the creams without informing the customers that their health insurance provider would be billed several thousand dollars each for the prescription creams, it was stated.
The prosecutor said Top Tier sales representatives collected health insurance information from the customers they solicited and failed to inform the customers that such creams would be prescribed by a medical professional without any medical consultation.
He said Top Tier received a commission from the dispensing pharmacy in the form of a percentage of the amount paid by insurance companies or federal healthcare programs.
Prosecutor Piper said generally that percentage was around 30 to 40 percent of the total cost of the cream, although at times Top Tier receive 50 percent of the cost of the cream.
He said most of the customers never paid a co-pay to the insurance companies and some customers were induced to order the creams because they would receive a kickback in the form of a fee for an "evaluation" or for participation in a "study."
The prosecutor said the amount of the kickback was nominal, usually $100 or $200, to participate in the "study" but he said it "was a sufficient inducement for customers to order the creams."
He said the scheme included soliciting "customers," many of whom had no pre-existing medical condition or need to receive prescription topical creams for pain, wounds, scars and other ailments.
Also, the scheme involved dispensing very expensive prescriptions in the absence of a valid doctor-patient relationship. For example, most of the "customers" would sign up for creams without ever actually seeing a doctor or healthcare practitioner. On some occasions, the customers had no contact with a prescribing healthcare practitioner. On other occasions, the healthcare practitioner would diagnose the customer's symptoms over the phone and issue the prescription based on that contact.
The Chatfield indictment says he solicited customers to order creams without providing certain information, and he hired sales reps to do the same.
It seeks a personal judgment against him and the forfeiture of a 2015 Cadillac Escalade and a 2014 Toyota 4Runner.