Shutterstock

Crime

Feds Say Dallas’ Medoc Health Services Ran a Major Kickback, Fraud Scheme

An update to some previous reporting.

The federal government hit Medoc Health Services with a lawsuit alleging the Dallas-based pharmacy services provider filed hundreds of false claims and engaged in a kickback scheme worth millions of dollars. The complaint comes about a year after the FBI raided the company’s North Dallas offices.

The feds allege Medoc received about $2 million in kickbacks through three North Texas pharmacies in exchange for funneling prescriptions from their web of physicians. In two cases, they masked the payments with a “sham employment agreement” that falsely put a Medoc co-owner in the pharmacy’s employ. In the other, the money was funneled through a different firm under the guise of management services, says the complaint.

It names nine defendants in all: Medoc; owner and CEO Kevin Kuykendall and VP of finance Sabrina Kuykendall (the two are married); additional Medoc owners Trenton Moody, Mark Schneider, Michael Schneider, and Moky Cheung; and compounding pharmacy Total RX Care as well as its owner, Cuong “Michael” Nguyen.

I wrote about the alleged scheme at Medoc for the September 2018 issue of D CEO. Former employees contacted me to describe a greedy operation allegedly incentivizing a network of physicians to prescribe high mark-up medications. Medoc would then funnel the meds through pharmacies to which it had a financial tie. The physicians were grouped into subsidiaries (called MSOs), co-owned by Medoc, that earned payouts based on referrals.

“In this way, Medoc was able to control the prescriptions generated by MSO physicians,” the complaint reads.

The employees I spoke to said Medoc’s most lucrative schemes involved private insurance, but the 115-page complaint focuses on how the company’s actions impacted federal healthcare programs like Medicare, Tricare, and Department of Labor programs. The feds are intervening in an existing civil case involving a Massachusetts-based pharmaceutical products company.

In all, the U.S. paid the three pharmacies more than $6 million “on the basis of kickback-tainted false claims” covered by the government healthcare programs. There are also claims of fraud, unjust enrichment, and payment by mistake. The complaint—full thing here—says the feds could continue to investigate Medoc for further action.

Newsletter

Get a weekly recap in your inbox every Sunday of our best stories from the week plus a primer for the days ahead.

Find It

Search our directories for...

Restaurants

Restaurants

Bars

Bars

Events

Events

Attractions

Attractions

View All

View All

Comments