Uncovering the Hidden Fraud in Healthcare
A Scheme Spanning a Decade
The USPS Office of Inspector General recently exposed a significant healthcare fraud scheme that had been operating for over a decade. This scheme involved Texas pharmacies and medical professionals who billed the government for unnecessary prescriptions.
Targeting Federal Workers
The investigation revealed that these healthcare providers were prescribing compound pain creams to injured federal workers, including USPS employees, and charging inflated prices. The Department of Labor's Office of Workers' Compensation Programs (OWCP) was the primary victim in this scheme.
Criminal Charges and Estimated Losses
In 2025, the investigation resulted in criminal charges against 324 defendants, including:
- 96 doctors
- Nurse practitioners
- Pharmacists
- Other licensed medical professionals
The intended losses from this fraud were estimated to be over $14.6 billion.
The Beginning of the Investigation
The investigation began in 2015 when the USPS Office of Inspector General noticed unusually high reimbursements from OWCP to three Texas pharmacies. It was discovered that doctors were prescribing unnecessary creams and billing the government at inflated prices.
Financial Exploitation
Over a three-year period, these pharmacies billed OWCP more than $145 million and received over $90 million in payments. The creams themselves were inexpensive to produce, but the pharmacies billed thousands of dollars per prescription, keeping the profit and sharing it with others involved in the scheme.
Money Laundering and Tax Losses
The investigation also revealed that money was laundered through shell companies, causing approximately $24 million in tax losses to the U.S. government. In a related scheme, pharmacy owners billed a major private insurance company for unnecessary prescriptions written for their own employees.
Legal Consequences
- Two pharmacy owners pleaded guilty and were sentenced to a combined 32 years in federal prison.
- The government seized over $396.5 million in cash and $4.6 million in real property, marking the largest cash forfeiture in the history of the Justice Department's Northern District of Texas Health Care Fraud Unit.
Another Pharmacy's Involvement
Another family-owned pharmacy in Pharr, Texas, billed OWCP over $95 million and received $41 million in payments. This pharmacy also billed TRICARE nearly $10 million. The owner recruited marketers, a physician, and clinic staff to steer unnecessary prescriptions to the pharmacy in exchange for kickbacks.
Guilty Pleas and Sentencing
In total, 11 defendants pleaded guilty to healthcare fraud and kickback conspiracy charges. Nine have already been sentenced, with prison terms totaling more than 16 years, and were ordered to repay over $33 million to victims.
Victims of the Scheme
It is important to note that injured federal workers, including USPS employees, did not receive any financial benefit from the scheme and were considered victims of the fraud.
