Physician Sentenced in $145 Million Compound Cream Kickback Scheme Involving DOL-OWCP Billing

Key Takeaways

• An orthopedic surgeon was sentenced to 102 months in prison and ordered to pay more than $13 million in restitution for participating in a $145 million health care fraud scheme involving medically unnecessary prescription compounded creams.
• The physician accepted bribes and kickbacks from pharmacy owners who billed federal programs up to $16 000 per prescription for low-cost compounded medications.
• A federal jury convicted the surgeon of conspiracy and health care fraud following a multi-agency investigation into fraudulent billing submitted to the US Department of Labor’s Office of Workers’ Compensation Programs (DOL-OWCP) and private insurers.

An orthopedic surgeon has been sentenced to 102 months in federal prison and ordered to pay more than $13 million in restitution for his role in a large-scale health care fraud scheme involving prescription compound creams billed to federal programs. The case, prosecuted in the Northern District of Texas, centered on fraudulent claims submitted to DOL-OWCP and private insurance.

A federal jury convicted Dr Michael Taba, 61, of McKinney, Texas, on November 16, 2023, on one count of conspiracy to commit health care fraud and 3 counts of health care fraud. The sentencing follows findings that Taba accepted bribes and kickbacks in exchange for prescribing medically unnecessary compounded medications to injured federal workers.

Allegations of Bribes and Medically Unnecessary Compounded Prescriptions

According to court documents and trial evidence, Taba accepted payments from pharmacy owners who operated 3 pharmacies in Fort Worth and Arlington, Texas. In exchange for bribes and kickbacks totaling millions of dollars, Taba and other providers prescribed compounded creams that were determined to be medically unnecessary.

Evidence presented at trial showed that the creams were prepared in the back rooms of the pharmacies by untrained teenagers at an approximate cost of $15 per prescription. The pharmacies then billed DOL-OWCP up to $16 000 per prescription. Testimony from patients indicated that the creams were ineffective and, in some cases, caused painful skin rashes and irritation.

Between May 2014 and March 2017, the pharmacies billed DOL-OWCP and Blue Cross Blue Shield more than $145 million for prescriptions referred by Taba and other providers. Of that amount, more than $90 million was paid.

Conviction and Sentencing

Following a federal jury trial, Taba was convicted on all counts of a superseding indictment. The court sentenced him to 102 months of imprisonment and ordered restitution exceeding $13 million. The restitution reflects losses attributed to the fraudulent scheme involving federal health care benefits programs.

Federal officials characterized the conduct as a breach of trust by a licensed medical professional who prioritized illegal financial gain over patient welfare and program integrity.

The case was investigated by the US Postal Service Office of Inspector General, the US Department of Labor Office of Inspector General, the Department of Veterans Affairs Office of Inspector General, and Internal Revenue Service Criminal Investigation.

Implications for Pharmacists and Compound Prescription Oversight

This case underscores ongoing federal scrutiny of compounded medications, referral relationships between prescribers and pharmacies, and billing practices involving federal health care programs. For pharmacists, particularly those involved in compounding and federal reimbursement, the case highlights enforcement risks associated with kickback arrangements, medically unnecessary prescribing, and inflated billing practices.

The sentencing reinforces the government’s position that health care professionals who engage in fraudulent billing schemes—particularly those involving federal benefit programs—may face substantial criminal penalties, financial restitution obligations, and professional consequences.

As federal agencies continue coordinated efforts to combat health care fraud, pharmacies and prescribing providers remain under significant regulatory and criminal enforcement oversight regarding compound medications and reimbursement practices.

Reference

Texas doctor sentenced to 8.5 years in prison for $145 million health care fraud scheme. US Department of Justice. February 24, 2026. Accessed February 25, 2026. https://www.justice.gov/opa/pr/texas-doctor-sentenced-85-years-prison-145-million-health-care-fraud-scheme