Here’s a roundup of recent fraud cases and convictions announced by the Department of Justice (DOJ).
LAB OWNER PLEADS GUILTY TO $30M MEDICARE FRAUD
A Florida man, the figurehead owner of Clear Choice Diagnostics Inc., pleaded guilty to his role in a scheme to defraud Medicare by billing for over-the-counter COVID-19 test kits and genetic tests that were ineligible for reimbursement and procured by paying illegal kickbacks and bribes.
The DOJ said that Robert M. Clark, 29, and his co-conspirators, including the true owner of Clear Choice, purchased Medicare Beneficiary Identification numbers without lawful authority and then used those numbers to bill Medicare for over-the-counter COVID-19 test kits. They also paid illegal kickbacks and bribes to marketers in exchange for referrals of Medicare beneficiaries for genetic tests. In total, Clark and his co-conspirators caused Clear Choice to submit approximately $30 million in fraudulent claims to Medicare for these tests, of which Medicare paid approximately $15 million.
Clark pleaded guilty to conspiracy to defraud the United States, to pay illegal health care kickbacks, and to purchase Medicare Beneficiary Identification numbers without lawful authority. He is scheduled to be sentenced on June 20 and faces a maximum penalty of five years in prison.
FORMER GEORGIA INSURANCE COMMISSIONER PLEADS GUILTY TO HEALTH CARE FRAUD SCHEME
John W. Oxendine, the former Georgia State Insurance Commissioner, pleaded guilty to conspiracy to commit health care fraud in which he referred unnecessary medical tests to a lab company in Texas in return for hundreds of thousands of dollars in kickbacks. He will be sentenced on July 12.
“John Oxendine, as the former state-wide insurance commissioner, knew the importance of honest dealings between doctors and insurance companies,” said U.S. Attorney Ryan K. Buchanan in the announcement. “But for personal profit he willfully conspired with a physician to order hundreds of unnecessary lab tests, costing hundreds of thousands of dollars. He will now be held accountable for violating the public’s trust.”
According to the charges and other information presented in court, Oxendine conspired with Dr. Jeffrey Gallups and others to submit fraudulent insurance claims for medically unnecessary Pharmacogenetic, Molecular Genetic, and Toxicology testing. Physicians associated with Dr. Gallups’s ENT practice were pressured to order these medically unnecessary tests from Next Health, a lab in Texas. As part of Oxedine’s health care fraud scheme, Next Health agreed to pay Oxendine and Dr. Gallups a kickback of 50 percent of the net profit for eligible specimens submitted by Dr. Gallups’s practice to the lab company.
In connection with the scheme, Oxendine gave a presentation at the Ritz Carlton in Buckhead where he pressured doctors in Dr. Gallups’s practice to order the unnecessary tests. Next Health later submitted insurance claims seeking more than $2,500,000 in payments from private health insurers for the unnecessary tests. The insurance companies paid almost $700,000 to Next Health because of these fraudulent claims. Next Health then paid $260,000 in kickbacks to Oxendine and Dr. Gallups. Some patients were also charged for the tests, receiving bills of up to $18,000.
To conceal the kickback payments, Oxendine and Dr. Gallups arranged for the payments to be made from Next Health to Oxendine Insurance Services, Oxendine’s insurance consulting business. Oxendine used a portion of the kickback money to pay debts for Dr. Gallups: a $150,000 charitable contribution and $70,000 in attorney’s fees.
When a compliance officer at Dr. Gallups’s practice raised concerns about the kickbacks, Oxendine told Dr. Gallups to lie and say the payments from Oxendine to Dr. Gallups were loans. He directed Dr. Gallups to repeat the lie after he was questioned by federal agents about Next Health. And when interviewed about Next Health by the Atlanta Journal-Constitution in connection with a private lawsuit, Oxendine falsely denied working with the lab company or receiving money from the business.
GAMMA HEALTHCARE TO PAY $13.6M FOR ALLEGEDLY BILLING MEDICARE FOR LAB TESTS NOT ORDERED OR MEDICALLY NECESSARY
Gamma Healthcare Inc. (Gamma), a Missouri laboratory and three of its owners, have agreed to pay the United States $13.6 million to resolve allegations that they violated the False Claims Act by submitting or causing the submission of claims to Medicare for lab tests that were not ordered by health care providers and were not medically necessary.
The settlement resolves allegations that, from Jan. 1, 2020, to Oct. 31, 2020, Gamma and its owners, Jerry W. Murphy, Jerrod W. Murphy and Joel W. Murphy, submitted or caused to be submitted claims to Medicare for medically unnecessary polymerase chain reaction (PCR) urinalysis laboratory tests that were not ordered by treating physicians. Physicians expressed concerns to Gamma about the tests as early as March 2020, including concerns that they did not order the tests, that the tests were expensive and that they were not medically necessary.
“Health care providers who cause the submission of Medicare claims for medically unnecessary services pose a significant risk to the program and the patients who rely on it,” said Special Agent in Charge Linda Hanley of the Department of Health and Human Services, Office of Inspector General (HHS-OIG), in the announcement. “HHS-OIG works diligently with our law enforcement partners to hold accountable individuals who, to satisfy their own greed, exploit federal health care programs.”
The civil settlement includes the resolution of claims brought under the qui tam or whistleblower provisions of the False Claims Act by Bradley Bibb M.D., a physician who owns health care clinics and provided services to patients for whom Gamma performed laboratory tests. Bibb will receive $2.3 million of the proceeds from the settlement.
DOC SENTENCED TO 20 YEARS IN PRISON FOR ILLEGALLY PRESCRIBING OPIOIDS
A Tennessee nurse practitioner known locally as the “Rock Doc” was sentenced to 20 years in prison for illegally prescribing opioids—including oxycodone and fentanyl—from his medical practice in Jackson, Tenn.
According to court documents and evidence presented at trial, Jeffrey W. Young Jr., 49, of Jackson, used his medical practice, Preventagenix, to illegally prescribe medically unnecessary controlled substance pills to hundreds of patients, including a pregnant woman and women with whom he was having inappropriate physical relationships. Young maintained a party-type atmosphere at his clinic and prescribed these drugs at least in part to boost his popularity on social media and promote a self-produced reality TV show pilot based on his self-identified persona, the “Rock Doc.” Young prescribed more than 100,000 doses of hydrocodone, oxycodone, and fentanyl into the community.
“Mr. Young operated a medical practice with a wanton disregard for the health and well-being of his patients who entrusted him with their medical care,” said Acting Special Agent in Charge Erek Davodowich of the Drug Enforcement Administration (DEA) Louisville Field Division, in the DOJ announcement. “Any health care provider who conducts business in such a manner that causes harm to his patients and community should expect to meet the full weight of the justice system."
DME OWNER SENTENCED FOR $87M HEALTH CARE FRAUD KICKBACK CONSPIRACY
An owner of a durable medical equipment (DME) company was sentenced to three and a half years in prison and ordered to forfeit $1.8 million for his participation in a health care fraud kickback conspiracy.
According to court documents and evidence presented at trial, Mark Sorensen, 53, of Chicago, owned Symed Inc., a Chicago DME pharmacy that paid illegal kickbacks to obtain patients to bill to Medicare, TRICARE, and the Department of Labor’s Office of Workers’ Compensation Programs. Between 2015 and 2018, Sorensen illegally bought patient leads from Bernie Perconti, who in turn obtained the leads from others, including Craig O’Neil and Christine Anderson. Sorensen and his co-conspirators also tricked patients into agreeing to receive braces. Many times, patients received braces that they did not need or want, and sometimes received four, five, or six braces. The co-conspirators also repeatedly called and faxed doctors to get them to sign the prescriptions authorizing the braces. In total, Sorensen and his co-conspirators, through Symed, fraudulently billed Medicare $87 million and received $23.6 million.
Perconti, O’Neil, and Anderson each pleaded guilty to conspiracy to pay and receive kickbacks in October 2019, July 2020, and January 2021, respectively. Perconti and O’Neil are scheduled to be sentenced at a later date. Anderson was sentenced in April 2022.