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Press Release

DermaTran and three other pharmacies pay over $6.8 million to settle civil claims

For Immediate Release
U.S. Attorney's Office, Northern District of Georgia

ATLANTA - DermaTran Health Solutions, LLC; Pharmacy Insurance Administrators, LLC; Legends Pharmacy; TriadRx; and the former owners of Lake Side Pharmacy and related entities, agreed to pay $6,876,564 to resolve allegations that they violated the False Claims Act by waiving copays, charging the government higher prices than permitted, and trading federal healthcare business with other pharmacies.

“Waiving copays and charging the government higher prices leads to overutilization and costs federal programs millions of dollars in unnecessary spending,” said U.S. Attorney Ryan Buchanan. “Our office will continue to enforce the False Claims Act to recover government payments that result from such misconduct.”

“Health care fraud abuse like this case erodes the trust patients have in the health care system,” said Keri Farley, Special Agent in Charge of FBI Atlanta. “The FBI will not stand by when there are allegations of companies operating corporate wide schemes to illegally line their pockets.”

“Fraud through compounding pharmacies bilked billions out of TRICARE and undermined the integrity of our healthcare system designed to care for our service members and their families,” stated Cynthia Bruce, Special Agent in Charge of the Department of Defense, Office of Inspector General, Defense Criminal Investigative Service (DCIS).  “I appreciate the partnership among involved law enforcement agencies and the U.S. Attorney’s Office to bring this matter to justice.”

“The OPM OIG has no tolerance for businesses that knowingly take advantage of FEHBP, violating the rules to make a profit,” said Amy K. Parker, Special Agent in Charge, OPM OIG. “I am extremely proud of the hard work of our investigators, analysts, and other law enforcement partners because overcharging the government is not a victimless crime – it contributes to higher premium prices and harms the financial integrity of the FEHBP.”

“The U.S. Postal Service, Office of Inspector General, will continue to tirelessly investigate those who commit frauds against federal benefit programs and the U.S. Postal Service. This settlement is a clear message that the USPS OIG is dedicated to rooting out corruption and bringing to justice those responsible for these crimes, said Special Agent in Charge Matthew Modafferi of the U.S. Postal Service, Office of Inspector General Northeast Area Field Office. The USPS OIG would like to thank our law enforcement partners and the Department of Justice for their efforts in this investigation”.

“Health care providers that try to boost their profits by submitting fraudulent claims to Federal health care programs threaten the integrity of those programs and drive up prices for everyone,” said Tamala E. Miles, Special Agent in Charge with the U.S. Department of Health and Human Services Office of Inspector General. “We work tirelessly alongside our law enforcement partners to protect the integrity of Federal health care programs and to ensure the appropriate use of taxpayer dollars.”

The government alleged that in 2012, pharmacy DermaTran Health Solutions, LLC (“DermaTran”), opened in Rome, Georgia, for the purpose of making and selling custom “compound” pain creams. DermaTran’s owners during the relevant time include DIII Consulting, LLC; SRM Holdings, LLC; Gussenhoven Holdings, LLC; Sam Moss; and Robert Gussenhoven. At the same time, another company named Pharmacy Insurance Administrators, LLC (“PIA”), was created to handle the billing for DermaTran. During the relevant time, PIA was a subsidiary of Insurance Administrative Solutions, LLC; which was a subsidiary of Gulfcoast Administrators, LLC; which was majority-owned by Life & Health Holdings, Inc.; which was a subsidiary of State Mutual Insurance Company.

Compound pain creams were very lucrative. Government-backed health insurance programs such as TRICARE (for the military) and the Federal Employees Health Benefits Program (for federal workers) would reimburse hundreds of dollars for these prescriptions. But the government programs imposed certain restrictions to limit spending. For example, patients were required to contribute to the cost of the prescription in the form of copays. The government programs also limited payments to the “usual and customary price”—the price charged to a cash-paying, uninsured patient.

The Government alleged that DermaTran and PIA found ways to avoid these restrictions. DermaTran and PIA created a copay-waiver program where patients would have their copays waived based on a brief, unverified statement of economic need. DermaTran and PIA also misled the government programs about the price being charged to uninsured, cash-paying patients by falsely stating that that price was high when, in fact, it was only $30. As a result, there were days that veterans were charged $600+ for pain creams, while uninsured patients were charged only $30.

Eventually, various auditors uncovered these problems and began to terminate DermaTran from their networks. The Government alleged that DermaTran, looking for a way to continue to earn money, began selling its out-of-network prescriptions to other pharmacies. The other pharmacies could fill the prescriptions because they were still in network. After filling the lucrative prescriptions, the other pharmacies remitted a portion of the proceeds to DermaTran and PIA. The government alleged that this arrangement constituted an illegal kickback. The other pharmacies that participated in this prescriptions-for-money scheme included Legends Pharmacy (in Texas), Lake Side Pharmacy (in Alabama), and TriadRx (in Alabama).

The Government’s False Claims Act claims based on the above allegations are being settled. PIA will contribute $6.5 million to the settlement. DermaTran is no longer operating and was sold in an arm’s-length transaction to a third-party buyer last year for the price of $40,000. That amount will be turned over to the government as part of the settlement. MLDP of Texas, LP (a/k/a “Legends Pharmacy”) will pay $59,293. TRIAD Rx, Inc. will pay $166,547. Lake Side Pharmacy is no longer in business, but former owners of Lake Side Pharmacy will pay $110,724. The former owners include Titan Medical Marketing, LLC; Donald Wayne Bogue; George Takashi Elkins; James Bernard Bogue, Jr.; Robert Joseph Puckett, Jr.; Robert Joseph Puckett, Sr.; Stephen Weston Wilson; and Charles Franklin Taylor, Jr.

This civil settlement resolves a lawsuit filed in the U.S. District Court for the Northern District of Georgia by a former accountant for DermaTran, under the qui tam, or whistleblower provisions, of the False Claims Act. United States ex rel. Doe v. DermaTran Health Solutions, LLC, et al., Civil Action No. 1:17-CV-1765.  Under the False Claims Act, private citizens may bring suit for false claims on behalf of the United States and share in any recovery obtained by the government. The whistleblower will receive $1,434,775 from the settlements. PIA will also pay her attorney’s fees.

The claims resolved by the settlement are allegations only, and there has been no determination of liability.

This case was investigated by the U.S. Attorney’s Office for the Northern District of Georgia, the FBI, the Defense Criminal Investigative Service, the US Office of Personnel Management – Office of the Inspector General, the U.S. Postal Service – Office of Inspector General, and the Health and Human Services – Office of Inspector General.

The civil settlement was reached by Assistant U.S. Attorney Anthony DeCinque.

For further information please contact the U.S. Attorney’s Public Affairs Office at or (404) 581-6016.  The Internet address for the U.S. Attorney’s Office for the Northern District of Georgia is

Updated October 12, 2022

False Claims Act