County school officials said Thursday they have suspended without pay three employees involved in a "cream scheme" that took the Hamilton County Schools for over $954,000.
School officials said the employees denied they had taken part in any criminal wrongdoing, and they have not been charged.
The schools did not release the names of the suspended employees, but it was testified in Federal Court on Wednesday that over $800,000 of the loss was based on creams ordered at exorbitant prices billed to the county insurance by county school assistant principal Keitha Booker and his daughter, Sydney Snyder.
Booker had been serving as athletic director and assistant principal at East Hamilton School up until his suspension.
Other cream charges from county school employees at the time of the scam included $32,000 for Kim Womble, a Tyner Academy staff member, and Katrich Williams, a former star basketball player for Tyner, whose charges were over $41,000.
There were over $47,000 in cream orders from former Tyner Academy principal Julius Hargrove. He was principal at Tyner from 2014 until retiring last year.
Amounts submitted to the county schools for cream payment included $450,000 on orders for Ms. Snyder and almost $400,000 on orders for Booker.
Prosecutor Perry Piper said Booker's girlfriend at the time (now wife), Amanda Morgan Booker, made over $100,000 in commissions from recruiting others to order the cream. She was a government witness in the case on Wednesday morning. She said she was introduced to the scam by Wayne Wilkerson, who is one of five defendants standing trial. They worked together at a local med spa.
Ms. Booker has not been charged in the case, though some who were recruiters have, including her cousin who she introduced to the lucrative enterprise.
Krista Torrance, county school employee benefits manager, said the county schools are self-insured. She said the cost of the scam "will ultimately go back to the taxpayers."
She said BlueCross BlueShield has been working to recover some of the cream payout from pharmacies that billed the county schools. She said about $325,000 has been recovered.
Keitha Booker was a 10-year assistant at Chattanooga State, then was the boys' basketball coach at Tyner before moving into administration at Howard Academy.
The creams were said to cure skin disorders and heal scars, stretch marks and wounds. A government study found they had little to no helpful effect.
Wilkerson, Kasey Nicholson, Michael Chatfield, Billy Hindmon and Jayson Montgomery are standing trial on numerous health care fraud, wire fraud, mail fraud and money laundering counts. Authorities said the group had fraudulent billings to the military health insurance program (TRICARE) and private insurors of over $25 million. Charges for a bottle of cream to insurors exceeded $15,000 per jar in some cases. The trial is at the Federal Courthouse on Georgia Avenue.
County School Attorney Scott Bennett said, "Between 2015 and early 2016, the U.S. Attorney's office determined that a national insurance fraud scheme involving prescription drugs included Blue Cross/Blue Shield of Tennessee (BCBS), the insurance administrator for the Hamilton County Department of Education.
"In early 2016, BCBS noticed there had been exorbitant charges to the district's employee health plan for bulk chemical creams, prompting the district to consider revising coverage to exclude these types of prescriptions in the future. However, in April 2016, an employee notified the district’s benefits office of a suspicious email solicitation regarding prescriptions for pain creams. The district reached out to me seeking advice on what to do with this information. I advised the administration to contact the county District Attorney. On the advice on the DA’s office, the Hamilton County Department of Education benefits personnel discontinued filling prescriptions related to the creams shortly thereafter.
"According to the indictment obtained by the U.S. Attorney for the Eastern District of Tennessee, BCBS had been a victim of a national insurance scam that resulted in millions of dollars in fraudulent charges, largely targeting TRICARE, the U.S. military public insurance provider. As part of that scheme, between January 2015 and early 2016, the fraudulent charges to BCBS related to the Hamilton County Schools plan were estimated to be $954,000. The fraudulent charges were facilitated through out of state doctors writing prescriptions for employees that were filled by pharmacies and then billed to the district insurance plan. BCBS was later able to recoup approximately $325,000 in charges from the pharmacy that filled the prescriptions.
"Hamilton County Schools benefits office cooperated with Neil Pinkston, the Hamilton County District Attorney, the Hamilton County Sheriff’s Office, and the U.S. Attorney's Office in the lengthy investigation, but these law enforcement officials did not share with anyone the scope of their investigation or the impact on the school system. School officials learned just prior to the trial that three current employees would be implicated in the scheme, but the district could take no action until after the government put on its case. The U.S. Attorney is in charge of the case.
"Since the case is now in the public domain, Hamilton County Schools has launched an internal investigation into the actions of the employees implicated; they deny any criminal wrongdoing. However, the individuals have been suspended without pay pending the results of the internal investigation.
"The district administration proceeded in a manner consistent with my legal advice and in cooperation with local and federal law enforcement towards resolving this insurance fraud case. The U.S. Attorney required extreme confidentiality while the case was pending. Circumstances certainly did not allow for any communication regarding the insurance fraud that took place during the 2015-2016 time frame."