Three East Tennesseans Sentenced to Prison in Multi-Million-Dollar Prescription Fraud Scheme

Three East Tennessee residents have been sentenced to federal prison for their roles in a multi-million-dollar prescription fraud conspiracy that targeted Medicare Part D and private drug plans. Barbara A. Smith, 75, of Powell, received 37 months imprisonment, while Jared Grant Riddle, 47, and Brian M. Woods, 48, each received 33-month sentences. The defendants were also ordered to pay millions in restitution—Smith $4.8 million, Riddle $8.7 million, and Woods $7.4 million—for their roles in a scheme that defrauded healthcare programs of more than $7.3 million.

From May 2018 to October 2020, Grant Riddle, a licensed pharmacist who operated six retail pharmacies doing business as Riddle Drugs, created a drug formulary based solely on high reimbursement values, including pain creams and the muscle relaxer chlorzoxazone 250 mg. Riddle Drugs hired Woods to market the formulary to pain clinics. Woods provided blank formularies to Smith, an office manager at a Knoxville-area clinic, and agreed to pay her cash for signed formularies. Woods and Smith then altered signed formularies, adding check boxes for unprescribed medications and increasing refill counts. When clinic providers began crossing out medications to prevent alterations, Woods and Smith used blank formularies to create wholly forged documents, handwriting patient names, marking medications, and forging providers’ signatures. Riddle then submitted these altered and forged formularies to drug plans and pharmacy benefits managers for reimbursement. Medicare Part D alone paid approximately $4.8 million on the fraudulent claims.

In a separate but related case, Ernest Riddle, 78, who owned United Apothecary and its six pharmacies, was sentenced to 15 months for conspiring to pay kickbacks to out-of-state marketers in exchange for signed prescriptions. Medicare paid approximately $1.3 million on those prescriptions. This case reflects the government’s continued focus on prescription fraud schemes that exploit Medicare and private insurance through forged documents and illegal kickback arrangements. The investigation was conducted by the HHS Office of Inspector General and the FBI.