Former Georgia insurance commissioner sentenced to 3.5 years in prison
John Oxendine was sentenced for conspiracy to commit healthcare fraud in connection with unnecessary lab testing.
Photo: Blanchi Costela/Getty Images
Former Georgia Insurance Commissioner John Oxendine was sentenced to three and a half years in prison this week for conspiracy to commit healthcare fraud in connection with unnecessary lab testing, according to the U.S. Department of Justice.
U.S. Attorney Ryan K. Buchanan said that 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' ENT practice were reportedly pressured to order these medically unnecessary tests from Next Health, a lab in Texas. As part of Oxendine's alleged scheme, Next Health agreed to pay Oxendine and Gallups a kickback of 50% of the net profit for eligible specimens submitted by Gallups' practice to the lab company.
In connection with the scheme, Oxendine gave a presentation at the Ritz Carlton in Buckhead, Georgia where allegedly he pressured doctors in Gallups' practice to order the unnecessary tests. Next Health later submitted insurance claims seeking more than $3 million in payments from private health insurers for the unnecessary tests.
The insurance companies paid more than $750,000 to Next Health because of these fraudulent claims, the DOJ said. Next Health then paid $260,000 in kickbacks to Oxendine and Gallups. Some patients were also charged for the tests, receiving bills of up to $18,000.
To conceal the kickback payments, Oxendine and Gallups reportedly 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 a $150,000 charitable contribution and $70,000 in attorney's fees for Gallups.
When a compliance officer at Gallups' practice raised concerns about the kickbacks, Oxendine allegedly told Gallups to lie and say the payments were loans. He also directed Gallups to repeat the lie after he was questioned by federal agents about Next Health. When Oxendine was interviewed about Next Health by The Atlanta Journal-Constitution in connection with a private lawsuit, he falsely denied working with the lab company or receiving money from the business.
WHAT'S THE IMPACT?
Oxendine, 62, of Port St. Joe, Florida, was sentenced by U.S. District Judge Steve C. Jones to three years, six months in prison to be followed by three years of supervised release. He was also ordered to pay restitution in the amount of $760,175.34, and a $25,000 fine.
Oxendine was convicted on these charges on March 22 after he pleaded guilty.
"John Oxendine was motivated more by personal greed than his duty to patients and the citizens of Georgia whom he used to represent," said Keri Farley, Special Agent in Charge of FBI Atlanta. "Not only did the former state insurance commissioner line his pockets off the unnecessary tests, but he also directed another to lie to federal agents to try and cover up the fraud."
THE LARGER TREND
According to the U.S. Department of Justice, settlements and judgments under the False Claims Act exceeded $2.68 billion in the fiscal year ending Sept. 30, 2023, and, of that total, more than $1.8 billion related to matters that involved the healthcare industry – including managed care providers, hospitals, pharmacies, laboratories, long-term acute care facilities and physicians.
The government and whistleblowers were party to 543 settlements and judgments, the highest number of settlements and judgments in a single year. Recoveries since 1986, when Congress substantially strengthened the civil False Claims Act, now total more than $75 billion.
Jeff Lagasse is editor of Healthcare Finance News.
Email: jlagasse@himss.org
Healthcare Finance News is a HIMSS Media publication.
