A witness in the "Cream Scheme" case in Federal Court testified Thursday that he became a partner with Wayne Wilkerson after the cream cured pain his mother had been having for years. He said, "She had just had foot surgery and, after using the cream for seven days, she was able to get off all her medications."
Brian Kurtz, who made $2.8 million from his involvement with the Wilkerson group in Chattanooga, also said the cream worked wonders at rest homes. He said with two weeks of use it cured bed sores that elderly patients had suffered with for years.
Wilkerson is facing healthcare fraud charges along with Michael Chatfield, Kasey Nicholson, Jayson Montgomery and Billy Hindmon.
The case took an unexpected turn late Thursday when Judge Sandy Mattice became exasperated with attorneys and threatened to "hold the whole courtroom in contempt."
He also said he may call his own witness in the case when it resumes on Friday morning, saying he has the authority to do so.
The judge directed the attorneys to have legal briefs on his desk by 9 a.m. on Friday morning on why he did not have the authority to call a witness. All of the attorneys said they did not object to him calling a witness.
Judge Mattice sparred a number of times with prosecutor Perry Piper. Near the end of the long day he chided another prosecutor, Franklin Clark, for his questioning of a defense witness. Prosecutor Clark said he was sorry he had "upset" the judge. When a defense attorney protested against questions to his witness, prosecutor Clark said they were related to credibility of the witness. Judge Mattice, waving his hand, said, "Credibility? Really?"
He said, "This is foolish what is going on here. Neither side has really gotten to the heart of the case."
On Friday morning, the judge said he is still considering calling his own witness and will decide later. The case resumes next Wednesday.
Judge Mattice is hearing the case without a jury and is to decide whether or not the defendants are guilty of conspiracy to commit healthcare fraud and a number of other mail fraud and wire fraud charges.
Mr. Kurtz, who is from Fort Wayne, Ind., said he met Wilkerson (of Ooltewah) at a training session for medical sales representatives and they became fast friends. He said early in 2013 Wilkerson told him about a topical cream he was pushing and they eventually agreed to become partners.
He said, "I told him I would take a real serious look at this, though it sounded too good to be true."
Mr. Kurtz said they had a handshake deal that each would receive an equal amount of the proceeds of the venture at the end of each month.
The witness said the cream was unique because it had a transdermal ability to penetrate beneath the skin to work its wonders. He said it was mixed with standard healing ingredients at compounding pharmacies.
He said he began pitching it to doctors in Indiana and Wilkerson started doing the same in Tennessee. He said he had an advantage because it was covered by Medicaid in his home state, but was not on the list of TennCare. He said, as a result, the Wilkerson group began marketing it to "patients" who agreed to try it after being told they would have little to no co-pay.
He said, "We had a magical product and we wanted to get it in as many hands as possible."
The witness said he and Wilkerson also spent $1.2 million on another venture - Karma Med Spa in Chattanooga. He said there was said to be lots of money in "cool sculpting" and other services at the spas and a chain of them was envisioned. A nurse practitioner who signed hundreds of "scripts" for the cream, Candace Craven, was involved in the spa venture. She also wound up being charged with fraud.
Mr. Kurtz said private insurance companies like BlueCross eventually stopped covering compound medications after getting millions of dollars in billings. However, the federal government's TRICARE insurance for veterans was still paying. He said the group ramped up for extensive billings to TRICARE only to learn a couple of days later that TRICARE was also dropping the expensive compounds.
The witness said the group did begin to get many questions and complaints from those who agreed to take the mail order creams when it was learned how much their insurance companies or the government was being billed. He said they then began telling the users the amounts up front. However, a number of witnesses at the trial said they had not been told that the billings were up to $15,000 a tube for the creams.
Mr. Kurtz said a pharmacist at Willow Pharmacy who wrote many cream scripts, Jared Schwab, was being paid by the group for his services as "a consultant." He said he and Wilkerson were also thinking about opening their own pharmacy and needed his advice. Schwab has not been charged in the case.
The witness said he has gotten out of the medical business, saying he was tired of dealing with doctors, lawyers and insurance companies. Noticing the courtroom full of attorneys, he retracted the lawyer part of his comment. He is now a construction contractor.
Another witness, Brian Tabor, said he had been involved with Florida Pharmacy Solutions, which prosecutors say took in $40 million in 11 months while it was active in the cream compounding.
He said it was important to find out which insurance companies would cover a particular medication, such as the creams.
The witness said at times "fake" submissions were made to insurance companies to determine coverage and at what amounts.
Mr. Tabor said there was a $1,000 limit on payment for compounding creams. But he said it was no problem to get an over-ride on the limit and the charge became limit-less. The over-ride would come from firms that handle claims, such as Express Scripts.
He said, "It wasn't difficult at all to get them overridden. It was very routine."
At this point, he said, "The compounds are no longer covered."
Judge Mattice interrupted to tell a story to update attorneys on his thinking about the case. He said in the 1990s he was talking with a friend who was a higher up in the Securities and Exchange Commission. He said he asked the friend why there were not many securities crackdowns.
He said the friend replied, "People do not care if they are being defrauded as long as they are making money."
Judge Mattice asked, "Is there such a thing as asking to be defrauded? Does that excuse the fraud?"