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Kickback Scheme Gone Wrong Results In Two Hefty Settlements

In the medical world, receiving kickbacks seems to be among the top ways to fraudulently attain big bucks. It’s an illegal “you scratch my back and I’ll scratch yours” operation that is undertaken by people from all walks of life across the United States. Kickbacks are payments provided to someone who recommends a particular drug or perhaps a specific clinic so that the drug company or clinic can boost earnings.

As Kelsy Schlotthauer of Tulsa World reports, 42 year-old Brandon Claflin and 35 year-old James Paul Adams are two of the latest perpetrators to be caught conducting an illegal kickback scheme. Claflin is a licensed doctor of osteopathic medicine, based in Tulsa, Oklahoma. Adams is the owner of One Source Healthcare Organization, a Texas-based marketing company.

Both Clafin and Adams accepted kickbacks from OK Compounding.

According to Schlotthauer’s report, OK Compounding, a former Skiatook, Oklahoma-based pharmacy, compound and sold a pain cream that Claflin regularly prescribed between 2013 and 2014 in order to receive kickbacks from the company. Because TRICARE and the Office of Workers’ Compensation Programs of the United States Department of Labor insured some of Claflin’s patients, the kickbacks he received were in violation of the False Claims Act.

“Beginning in 2013, Dr. Claflin prescribed these pain creams for his patients, facilitating the sale and distribution of the creams,” details the DoJ report covering this story, “As compensation for his services, OK Compounding, paid Dr. Claflin what was characterized by the parties as ‘medical director fees’ based upon an hourly rate. However, the payments Dr. Claflin received from the company were, in actuality, ‘kickbacks.’”

Clafin and Adams have big settlements to pay.

Claflin has since agreed to settle with the U.S. Attorney’s Office for the Northern District of Oklahoma for $84,666.42. Adams also accepted kickbacks for referring compounded drug prescriptions to OK Compounding. He has agreed to pay $339,412.50 as a settlement.

“OK Compounding paid ‘substantial’ kickbacks to multiple third-party marketers in exchange for prescription referrals of compounded drugs…violating the Anti-Kickback Statute,” Schlotthauer further explains of the report, “Compounded drugs are mixed into a combination the Food and Drug Administration has not approved to suit a patient’s particular needs.”

Why are kickbacks illegal?

The DoJ explains that accepting kickbacks undermines the importance of prescribing medications appropriately. The report highlights the fact that kickbacks are prohibited in order to ensure that financial motives don’t supersede the medical judgement of doctors and other health care providers. “The civil False Claims Act is an important tool used to protect the integrity of taxpayer-funded health care programs,” notes the report.

U.S. Attorney Trent Shores made the announcement about Claflin’s and Adams’ settlements this past Tuesday. He made clear that the acceptance of kickbacks will continue to be regarded as a serious crime, just like any other act of health care fraud.

“Our Affirmative Civil Enforcement attorneys continue to prioritize these cases in an effort to recover illegally obtained funds that served to line the pockets of the corrupt,” Shores is quoted as saying in the DoJ report, “We are committed to ensuring that federal health care dollars are spent judiciously and in accordance with the law. Our diligence in this area sends a clear signal that abuse of federal health care programs will not be tolerated.”

Are you an attorney currently trying a health care fraud case?

Please don’t hesitate to contact Allegiant Experts to find out how our clinical expertise may help you. Call us at 407-217-5831 or email us at

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