A nurse practitioner in Cleveland, Tn., and a pharmacist in Louisiana were among medical insurance "gatekeepers" who allowed a multi-million-dollar "cream scheme" to take place based in North Hamilton County, it was testified Tuesday in Chattanooga Federal Court.
Agent Brian Kriplean, of the Food and Drug Administration's investigative division, said, "It's like with the income tax, the system operates on a level of trust in the gatekeepers."
He is the last government witness in a lengthy trial on Georgia Avenue. Wayne Wilkerson, Michael Chatfield, Kasey Nicholson, Jayson Montgomery and Billy Hindmon are facing criminal charges and possible prison time.
Candace Michele Craven, who worked at a small Cleveland pharmacy owned by one of the co-conspirators, testified earlier in the case that she was on the payroll of Wilkerson, the ring leader who lived next door to Chatfield on Rosada Drive in Ooltewah.
In one text message intercepted by the government, one of the scheme leaders said Ms. Craven had pledged "to fill 500 at a time" as soon as Wilkerson got a new Karma Med Spa set up.
Ms. Craven was arrested on healthcare fraud charges and is awaiting sentencing.
The witness also said that the pharmacist at Willow Pharmacy in Madisonville La., Jared Schwab, was getting payments for freely filling the cream prescriptions fed him mainly by Ms. Craven. For example, in April 2015, he got a payment for $5,000, it was stated.
At one point when Schwab was away from the office, one of the conspirators bemoaned the fact that "those lazy girls" at the pharmacy were not quickly filling the cream orders as he did.
Schwab has not been charged.
Wilkerson in one email informed others in the scheme that he was reducing their monthly payments to take care of Ms. Craven and the pharmacist. He said, "I budgeted what I had to pay for Michele and Jared." He also said, "I am withholding $1,000 from everyone to pay Jared for his consulting services. We need to get these (billings) out as soon as possible and Willow will facilitate them."
Billing for the compound creams was as much as $15,000 a jar, bringing huge charges to Blue Cross Blue Shield and later the military's TRICARE health program.
Those in the group signed up for creams, and they also got "commissions" from their own orders and from those they recruited. The drug stores working with the Wilkerson group had signed agreements that they would remit from 30-40 percent of the money received from the insurance companies on the cream billings.
When the scheme was going strong, hundreds of thousands of dollars were wired each month to LLCs set up by the members of the venture. The amount going to Wilkerson was over $2 million in a month, and he would pay out some of this on down the recruiter line.
The witness said Chatfield lined up numerous family members to get multiple creams, including his wife, Natalie Foster Chatfield; brother Brandon Chatfield, and uncle Jim Chatfield. His father, Hal Chatfield, was paid $470,000, it was testified.
Also on the patient list were Michael Chatfield's wife's parents, George and Deborah Foster of Lookout Mountain. George Foster came into court and said he did not know anything about ordering creams and never received them. The agent said the Foster creams went to the Michael Chatfield home and Natalie Foster Chatfield signed that she received them.
The amount billed insurors just for the creams for George Foster was $129,760, and for his wife it was a similar amount. The agent said Chatfield admitted that was his handwriting on the application for the Foster orders.
It was testified that Montgomery cashed in by signing up the large Hispanic family of a friend of his mothers. That generated a quarter million dollars in billings.
The agent told of members of the Hal Bowling family of Chattanooga, who signed up on the hood of their car while tailgating outside Finley Stadium during halftime of a game. Even a daughter who just turned 16 got her own slew of creams. That was $150,000 in billings.
A girl from Nashville who eventually moved to California and got into acting, Katherine Calloway, was also a "beneficiary." However, she said she found the creams "sketchy" and threw them away.
Agent Kriplean said Blue Cross finally got wise to the scheme and discontinued paying for compound creams. He said a week later a shaken Wilkerson asked his cohorts for input on who was still paying for the creams and what, if any, stipulations those remaining insurors might have.
In one of the text messages, Chatfield said, "I'm hoping they will refill most of them, and we will hit $10 million (in billings) this month."
In another exchange, Wilkerson and Kirtis Green were looking at a map of military bases. Green said, "All I see is $." Wilkerson replied, "D--- straight!!" The group filed millions in billings with the military's TRICARE. Green earlier pleaded guilty to healthcare fraud and got a 65-month federal prison sentence.
In another text, Chatfield commented it was "a good month." Green responded, "I agree brother!" Chatfield answered, "H--- yeah, this month we are going to murder it!"