What were the roots of Mississippi pain cream scheme? Hint: Walters, Thomley names pop up

Long before a massive multimillion-dollar health care fraud involving high-priced pain creams and other medications unfolded, two of the scheme's central architects worked together at another company accused of fraud.

Wade Walters, Hope Thomley and others were named in a lawsuit filed by Pearl River County Hospital in November 2013 alleging Performance Accounts Receivable and Performance Capital Leasing, Walters, Thomley and other individuals and entities "acted in concert to coerce the hospital to defraud Medicare and Medicaid."

Walters is listed as owners of both companies, which are now defunct.

"The fraud perpetrated upon the hospital was primarily orchestrated by Walters through Thomley and (Walters') agent Mike Boleware who, although being employed by the hospital as its chief executive officer, was also, upon information and belief, receiving compensation directly or indirectly from Walters, Thomley, and/or one of their companies," the lawsuit claimed.

Before the pain cream scheme began: Pearl River County claims Walters, Thomley defrauded hospital

According to the lawsuit, the hospital, on Boleware's orders, entered into a contract with Performance Accounts Receivable, dated Oct. 5, 2010. Thomley unofficially was installed soon after as the hospital's chief operating officer, drawing a paycheck from the hospital in addition to being paid by Performance Accounts Receivable, which was collecting 7% of the hospital's gross collections.

For subscribers:Wade Walters starts an appeal, changes his mind. What else happened?

The hospital's board of trustees never approved Thomley's position, nor were they told she was being paid by both the hospital and Performance Accounts Receivable, court documents show.

After three years of going through the court system, the lawsuit was settled before it went to trial, so the disposition is unknown.

For subscribers:Wade Walters starts an appeal, changes his mind. What else happened?

Walters, Thomley form roots of Mississippi pain cream scheme in 2011-12

Some time after the contract with Pearl River County Hospital was questioned — around 2011-12 — Walters and Thomley, both 54 of Hattiesburg, began formulating the scheme that eventually would grow into the state's largest health care fraud to date. More than $515 million in fraudulent prescription billings was made to TRICARE, Medicare, Medicaid and private health care benefit providers in Mississippi alone. 

Nationwide, more than $1.5 billion was reported in the fraud, which entailed marketing compounded medications to health care providers, especially those treating patients with military health care coverage. Rather than formulating the compounded medications based on an individual's needs the medications were prescribed to maximize profit. Some of the medications cost over $10,000 and up toward $15,000 apiece.

What did they get? Wade Walters' family wanted some assets returned.

Walters, Thomley and more than 20 others have been charged in the scheme. Most have pleaded guilty or were convicted at trial. Others are awaiting prosecution. 

Walters pleaded guilty in July, just days before he was set to stand trial. He was sentenced in January to 18 years in prison. He was accused of being responsible for more than $515 million of the fraud. That figure later was reduced to $287.7 million.

Thomley, who pleaded guilty in February 2019, was sentenced in July to 14 years in prison. She is believed to be responsible for about  $189.2 million of the fraud.

Her husband Randy Thomley, 62, who owned Thomley's Christmas Tree Farm, also played a role in the scheme. He was sentenced in July to eight years in prison.

What did they spend it on?:They got rich in $510M Mississippi pain cream scheme.

The Thomleys and Walters were involved with the pharmacy and ran several companies including Advantage Medical Professionals and United Medical Marketing Services under the guise of marketing the pain creams and other compounded medicines. 

Federal investigation culminated in statewide search of businesses

Federal investigators began looking into the scheme some time in 2014-15 and in January 2016 conducted an orchestrated statewide search of pharmacies and related businesses the agents believed were connected with the fraud, many of which have since been shut down.

Since that time, more than two dozen people in Mississippi were charged and at least 20 of them either pleaded guilty or were convicted at trial in connection with the fraud and were sentenced to prison or probation.

One person, Tiffany Clark of Meridian, was acquitted of all charges. Another. Dr. Gregory Auzenne of Meridian, was acquitted of seven of the eight charges filed against him.

Three others are set to stand trial in August: Mitchell "Chad" Barrett, who with Walters, Spell and Hope Thomley, is believed to be one of the scheme's "central architects"; and David “Jason” Rutland and Thomas “Tommy” Shoemaker, who were charged in May 2020.

Who was involved in Mississippi cases?

Indicted, awaiting trial

• Mitchell "Chad" Barrett, trial set for Aug. 16
• David "Jason" Rutland, trial set for Aug. 16
• Thomas "Tommy" Wilburn Shoemaker, trial set for Aug. 16

Guilty, sentenced

• Doyle Beach: 13 years
• Freda Covington: 1½ years
• Albert Diaz: 3½ years; released April 23, 2020
• Dempsey "Bryan" Levi, 7 years
• Jason May: 1 year, 1 day
• Marco Moran: 10 years
• Brantley Nichols: 1 year, 1 day
• Fallon Page: 1½ years
• Gregory Parker: 1½ years
• Susan Perry: 3½ years, released Oct. 28, 2020
• Silas Richmond: 1 year, 4 months; released May 27, 2020
• Jeffrey Rollins, 7 years
• Jay Schaar: 2 years, 3 months; released March 20, 2020
• Charles "Chandler" Smith, 5 years of probation
• Thomas Spell: 10 years
• Thomas Sturdavant: 2 years
• Shahjahan Sultan: 4 years
• Hope Thomley: 14 years
• Randy Thomley: 8 years
• Wade Walters: 18 years
• Joseph Wiley: 3 years

Acquitted

• Tiffany Clark
• Dr. Gregory Auzenne (found not guilty of seven charges, has one charge still pending. Auzenne was set for retrial in July, but the case is on hold while Auzenne appeals the government's decision to retry him.)

Contact Lici Beveridge at lbeveridge@gannett.com. Follow her on Twitter @licibev or Facebook at facebook.com/licibeveridge.