Recently unsealed court documents show federal authorities have seized 800 acres in Tallahatchie County as part of an ongoing, multi-state probe into allegations of a multi-million-dollar pharmacy fraud ring.
The Tallahatchie County property is owned by a Hattiesburg businessman named Wade Walters or by corporations associated with him. The hunting land outside Charleston and near the Brazil community is worth more than $400,000, according to courthouse records.
In all, federal agents have seized about $11 million worth of property, including parcels in Hattiesburg, Jackson, Vicksburg, Oxford and in Florida, Georgia and Lou-isiana, according to an Internal Revenue Service seizure order a federal judge unsealed last month.
A sworn statement by an IRS agent on Jan. 15 accuses unnamed compounding pharmacies of engaging in multiple forms of fraud, including split billing, price rolling and filling prescription orders against the wishes of a patient’s doctor.
Compounding pharmacies create custom medications by combining drugs.
Walters has ties to the Delta through consultant work connected to the financial turnarounds of county-owned hospitals in Charleston and Ruleville.
Walters bought the pharmacy at North Sunflower Medical Center in Ruleville from the hospital in 2014. He then leased the retail pharmacy back to the hospital, while one of Walters’ companies, Sunflower Discount Pharmacy LLC, operated a compounding pharmacy in the back portion of the building. The compounding pharmacy closed in June 2015.
The hospital then obtained its own license again to run the retail pharmacy.
On Jan. 21, FBI agents raided the former site of Sunflower Discount Pharmacy LLC, along with other properties throughout the state.
North Sunflower Medical Center officials have previously said the hospital had nothing to do with the compounding pharmacy operations under investigation.
Walters has filed court documents denying the allegations that were the basis of the seizure order. His attorney, Joe Hollomon of Jackson, said they “intend to vigorously defend it and get this property returned.”
“At the appropriate time, we will be able to present evidence hopefully that will paint a very different picture of what occurred here with regard to these compounding pharmacies and the medications,” Hollomon said Tuesday (July 12).
He said Walters is only an investor in pharmacies, not a pharmacist.
“Mr. Walters has got a long history as a very honorable businessman working in the area of hospital administration and financial administration, and he has a very long track record of honesty in his dealings and in his business,” Hollomon said.
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No criminal charges have been filed in the case, but a sworn statement by IRS Agent Darren Mayer laid out allegations against unnamed compounding pharmacies, which create custom medications by combining drugs.
Mayer said they engaged in price rolling, where pharmacies submit a claim to insurance to see how much they can get for a specific prescription and then cancel it and resubmit it using a differing compounding formulation to see if they can get a better reimbursement.
He also alleged they engaged in split billing “when a prescription that is written for a specified period (e.g. 30 days) is split into multiple, small prescriptions (i.e. one day or one week supplies).” Mayer said pharmacies may do this to avoid price caps placed by insurance companies on certain medications. Pharmacies often bill the insurance company a “dispensing fee” for each medication that is billed, even if the medications are given to the patient all at once.
Mayer also said pharmacies automatically refilled prescriptions in spite of doctors’ orders or patients’ wishes. He said in some instances patients were offered payments or told to destroy medications to keep them from cancelling the automatic refills or returning the medications, which would have obligated the pharmacy to reverse its insurance claim.
The pharmacies also allegedly told patients that they didn’t have to pay co-pays, made no effort to collect them or devised schemes where the pharmacy itself pays the co-pay, according to Mayer. Most insurance programs require patients to pay their own co-pays.
The sworn statement said many of the pharmacies used shell companies to hide their involvement after the pharmacy had been banned from a particular insurance program.
Mayer’s statement said marketing companies under the control of the co-conspirators allegedly paid kickbacks to health care providers to prescribe compounding medications filled by the pharmacies.
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The IRS agent said the investigation “uncovered evidence that the proceeds of the health care fraud and money laundering were used, directly or indirectly, to purchase the Defendant Real Properties.”
That allegedly included hunting land in Tallahatchie County. A check of records at the courthouse in Sumner revealed the seized parcels to be in three different rural areas of the county:
• 256 acres near Buzzard Bayou in the Brazil community
• 463 acres about 7 miles southwest of Charleston along Byars Road
• 81 acres about 8 miles south of Charleston off Mississippi 35
The property near Buzzard Bayou is jointly owned by DWWW LLC, which is associated with Walters, and BPCK Nichols LLC, associated with Dr. Brantley Nichols, an oral surgeon at North Sunflower Medical Center. Nichols’ company filed a claim in federal court July 6 saying it’s an “innocent owner” and that its property was illegally seized by the government. It requests that a judge immediately return the property. BPCK Nichols is represented by John Daniels III of Greenville.
Assistant U.S. Attorney Marc Perez of Jackson, the government’s lead attorney in the case, could not be reached for comment.
U.S. District Judge Tom S. Lee is hearing the case.
The next step in the court process is a telephone case management conference scheduled for Aug. 31.
Charlie Smith is editor and publisher of The Enterprise-Tocsin in Indianola.
IN THE PHOTO: A lock holds a gate shut near the Brazil community in Tallahatchie County Friday on property that the Internal Revenue Service seized as part of a compounding pharmacy investigation. (Photo by Charlie Smith/The Enterprise-Tocsin)
