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Former Georgia State Insurance Commissioner Pleads Guilty To Kickback Scheme

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7 months ago

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A former Georgia state insurance commissioner on Friday pleaded guilty to conspiracy to commit healthcare fraud in a scheme to refer unnecessary medical tests in return for hundreds of thousands of dollars in kickbacks, authorities said.
Former Georgia State Insurance Commissioner John W. Oxendine conspired with Dr. Jeffrey Gallups and others to submit fraudulent insurance claims for medically unnecessary pharmacogenetic, molecular genetic, and toxicology testing, in return for kickbacks, according to the U.S. Attorney’s Office for the Northern District of Georgia.
“John Oxendine, as the former state-wide insurance commissioner, knew the importance of honest dealings between doctors and insurance companies,” U.S. Attorney Ryan K. Buchanan said in a statement. “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 publics trust.”
According to court documents, Oxendine gave a presentation at the Ritz Carlton in Buckhead where he pressured physicians associated with Gallupss practice to order the unnecessary tests from Next Health, a lab in Texas. As part of the scheme, Next Health paid Oxendine and Gallups a kickback of 50 percent of the net profit from the unnecessary tests.
Next Health submitted claims seeking more than $2.5 million in payments from private health insurers for the unnecessary tests, of which the insurers paid nearly $700,000. Next Health then paid Oxendine and Gallups $260,000 in kickbacks.
Along with insurers, some patients were directly billed up to $18,000 for the unnecessary tests.
To conceal their scheme, Next Health made payments to Oxendine Insurance Services, Oxendines insurance consulting business. Oxendine then paid debts for Gallups, including a $150,000 charitable contribution and $70,000 in attorney’s fees.
When a compliance officer at Gallups’s practice raised concerns, Oxendine directed Gallups to lie and say the payments were loans. Oxendine also directed Gallups to lie when federal agents questioned him about Next Health. When Oxendine was questioned by the Atlanta Journal-Constitution in connection with a lawsuit, Oxendine denied working with Next Health or receiving money from them.
“This scheme to bill for unnecessary services has no place in our healthcare system,” said Keri Farley, Special Agent in Charge of FBI Atlanta. “It not only increased healthcare costs for all beneficiaries, but they also violated the trust of patients. John Oxendine not only profited from this scheme but took it a step farther and directed another to lie to federal agents to try and cover up the fraud.”
“Individuals who participate in kickback schemes risk undermining the integrity of federal health care programs,” said Special Agent in Charge Tamala E. Miles, U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG). “We will continue to aggressively investigate anyone engaging in illicit activities to protect taxpayer-funded federal health care programs from abuse by bad actors.”
“Todays plea should serve as a strong deterrent to those in positions of power who seek to exploit and defraud TRICARE, the militarys healthcare system relied on by our service members, retirees, and their families,” said Special Agent-in-Charge Darrin K. Jones, Department of Defense Office of Inspector General, Defense Criminal Investigative Service (DCIS), Southeast Field Office. “This investigation is part of an ongoing effort by the Defense Criminal Investigative Service to work with our law enforcement partners and aggressively investigate allegations of healthcare fraud that affect the Department of Defense and put its personnel at risk.”
Gallups previously pleaded guilty to health care fraud in connection with the scheme. Oxendine’s sentencing is scheduled for July 12.
TMX contributed to this article.
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