Crime

This Coast doctor faces up to 305 years in prison for his role in ‘House of Fraud’

Dr. Albert Diaz, who practices on the Coast, convicted March 2 on 16 counts of conspiracy, fraud and other crimes related to defrauding Tricare, the government insurance program for the military. U.S. District Judge Keith Starrett, who presided over the jury trial, sentenced Diaz on Thursday in Hattiesburg, where the conspiracy was based.
Dr. Albert Diaz, who practices on the Coast, convicted March 2 on 16 counts of conspiracy, fraud and other crimes related to defrauding Tricare, the government insurance program for the military. U.S. District Judge Keith Starrett, who presided over the jury trial, sentenced Diaz on Thursday in Hattiesburg, where the conspiracy was based. Hattiesburg American

A jury on Friday found Coast doctor Albert Diaz guilty of all 16 counts in connection to an alleged compound pharmacy scheme with roots in Hattiesburg. The vote on each count was unanimous.

Diaz, 78, an obstetrician and gynecologist from Ocean Springs, was remanded into custody until he has a bond hearing before a magistrate judge. Sentencing will be at 9:30 a.m. May 22 at William M. Colmer Federal Courthouse in Hattiesburg before U.S. District Judge Keith Starrett.

Diaz faces up to 305 years in prison and fines up to $7.5 million.

The jury began deliberations around 4:40 p.m. Friday and reached its verdict just before 11 p.m. Diaz's trial got underway Monday in U.S. District Court in Hattiesburg.

John Colette, Diaz's attorney, declined to comment, saying the verdict was "too sad" to talk about.

Colette immediately asked for a retrial, mentioning a contaminated jury and threats. Although one juror was not in attendance Friday, no explanation was given for her absence. It was not clear whether Colette's statement of a contaminated jury had anything to do with the absent juror.

Colette also sought to have Diaz immediately released on bond, but Starrett, who presided over the trial, refused. Diaz’s bond hearing is set for next week.

The ‘House of Fraud’

Diaz, whose practice is in Biloxi, admitted on the witness stand Thursday he signed several prescriptions for compounded pain and scar creams without ever seeing the patients.

He told the jury he believed pharmaceutical sales rep Jay Schaar when Schaar told him several VA patients were denied the pain creams by their doctors and would have to start taking oral opioids instead.

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Diaz said he was concerned about the patients getting addicted to opioids if they were used for long-term treatment, so he signed the prescriptions and told Schaar he needed to see the patients two weeks to a month later for followup.

The patients never appeared, yet Diaz kept signing prescriptions for Schaar, according to testimony.

After Diaz learned he was being audited by TRICARE, he contacted Schaar, who with Randy Thomley took Diaz to see the people for whom he had written the prescriptions to get patient information and set up files for them to submit in his response to the audit.

In closing, Colette said Diaz was an innocent pawn of the "House of Fraud," naming drug rep Schaar, who convinced him to sign prescriptions without seeing patients, and several others, including Hope and Randy Thomley and Jason May.

Colette called those who allegedly profited most from the scheme part of a "Millionaires Club." He said Hope Thomley received $86.4 million; Randy Thomley and May each made $4 million; and Schaar made $1.8 million.

"Everybody got money except for Dr. Diaz," Colette said. "What was in it for him?"

The Thomleys are not among the four who have been indicted in this case.

But Kate Payerle, an attorney for the government, said Diaz was a willing participant who got caught and was trying to cover up his crime by seeing the patients more than a year after writing the prescriptions.

"He knew his actions were against the law," she said.

How the scheme played out

The scheme allegedly defrauded TRICARE and other health care benefit providers of more than $400 million by prescribing medically unnecessary compounds.

Federal agents conducted multiple searches at pharmacies and other businesses on Jan. 21, 2016, seizing millions in property and bank accounts.

May and Schaar admitted their roles in the scheme, with May admitting to handling around $192 million of the fraudulently obtained money through his Hattiesburg-based Advantage Pharmacy by issuing "high-heeled compounded medications" that were expensive — some costing insurance companies tens of thousands of dollars.

May also admitted to laundering around $400,000 by transferring funds between various banks.

Schaar admitted to receiving kickbacks for helping Advantage Pharmacy fraudulently obtain around $2.2 million in reimbursements from TRICARE, the Department of Defense's military health care system.

Who was indicted

Dr. Albert Diaz, obstetrics and gynecology doctor in Biloxi, 16-count indictment: one count attempt and conspiracy; four counts fraud by wire, radio or television; one count conspiracy to distribute a controlled substance; four counts distributing, selling or dispensing a controlled substance; one count conspiracy; and five counts destruction, alteration or falsification of records in federal investigations.

Susan Perry, nurse practitioner in Biloxi, 13-count indictment: one count attempt and conspiracy; four counts fraud by wire, radio or television; one count conspiracy to distribute a controlled substance; one count distributing, selling or dispensing a controlled substance; one count conspiracy to defraud the U.S. government; four counts payment to a non-licensed physician; and one count statements or entries generally (making false claims or statements).

Jay Schaar of Gulfport, pharmaceuticals sales rep for Advantage Pharmacy in Hattiesburg: pleaded guilty to one count of attempt and conspiracy.

Jason May of Lamar County, pharmacist in charge and co-owner of Advantage Pharmacy: pleaded guilty to one count of conspiracy to defraud the U.S. government and money laundering.

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