Texas Pharmacy Owner, Operator Sentenced for Roles in Drug Prescription Scam

Brian Haney and Kevin Gray have learned the hidden cost of patient referrals. On December 1, Haney, part-owner of a pharmacy in the southeast Texas community of Vidor, and Gray, operator of a Houston-area pharmacy, were given identical sentences in Austin federal court of 28 months in prison for committing a combined more than $800,000 worth of bribery and tax evasion. This was part of a far larger drug prescription scheme that heavily involved union-sponsored health plans and fleeced taxpayers out of tens of millions of dollars in needless or otherwise inflated reimbursements. In addition, the defendants each were ordered to pay a $100,000 fine and $6,500 in court costs. The actions follow a joint probe by the FBI, IRS, U.S. Army, U.S. Postal Service and U.S. Labor Department’s Office of Inspector General.

Union Corruption Update has described this scheme more than once. Garry Craighead, a rock star among Texas chiropractors, founded and ran a chain of rehab clinics across the state under the brand name of Union Treatment Centers. The enterprise specialized in health plans sponsored by the American Federation of Government Employees, the American Postal Workers Union and other federal/postal employee unions. Revenues mainly were derived from reimbursements from the U.S. Department of Labor’s Federal Employees Compensation Act (FECA), better known as Worker’s Compensation. Craighead saw an untold side income. During 2008-15 he solicited and received kickbacks from various health care providers, in return referring FECA-certified patients to the providers. While making referrals is not illegal in and of itself, soliciting bribes for this purpose is. And taxpayers unwittingly financed these transactions because a great many of the prescriptions were either unnecessary, questionable or redundant. A whistleblower lawsuit led to a federal probe and eventually a guilty plea from Craighead in December 2015 for fraud, graft and money laundering. He was sentenced in June 2016 to 14 years in prison and ordered to pay nearly $18 million in restitution to Labor Department. And that wasn’t even the biggest scam. A Dallas-area lawyer and former Craighead employee, Tshombe Anderson, pleaded guilty in August 2017 to running a parallel scheme with four family members that defrauded FECA out of more than $26 million.

Pharmacies, played a key role in this. Nermin El-Hadik, a Houston-area pharmacy owner, for one, pleaded guilty in November 2016 to paying more than $5 million in kickbacks to Garry Craighead in return for patient referrals. Brian Haney pleaded guilty the following month to paying $813,560.87 in kickbacks to Craighead. He had help from Kevin Gray, a Houston pharmacy operator who pleaded guilty in April 2016. Like Haney, Gray not only bribed Craighead to steer customers his way, but understated his income on federal tax returns to cover the illicit income. The pair received identical sentences. U.S. District Judge Sam Sparks ordered Haney and Gray to pay, jointly and severally, $813,560.87 to the Department of Labor, and pay a respective $351,947 and $245,692 to the IRS.

The feds are satisfied justice has been done. Special Agent in Charge Steven Grell, U.S. Department of Labor, Office of Inspector General, Dallas Region, remarked: “To ensure patient referrals of federally-insured employees in need of prescription services, pharmacists Brian Haney and Kevin Gray paid more than $800,000 in illegal kickbacks to Dr. Larry Craighead, who is currently serving a 14-year sentence on related charges.” IRS Acting Special Agent in Charge Troy Caldron, San Antonio Field Office, noted: “Money gained through illegal sources, such as health care fraud, is part of the untaxed, underground economy (which) poses a threat to our voluntary tax compliance system and undermines the overall public confidence in our American system of taxation.”