Ex-insurance commissioner admits role in $2.5M health care kickback scheme
John Oxendine admitted to his role in a health care kickback scheme that netted him hundreds of thousands of dollars.
Former Georgia Insurance Commissioner John Oxendine pleaded guilty to conspiracy to commit health care fraud, a charge that arose from a more than $2.5 million scheme that netted Oxendine and a co-conspirator hundreds of thousands of dollars in kickbacks, according to the U.S. Attorney’s Office for the Northern District of Georgia.
Oxendine, who served as insurance commissioner from 1995-2011, Dr. Jeffrey Gallups and other co-conspirators submitted insurance claims for medically unnecessary pharmacogenetic, molecular genetic and toxicology testing, according to the attorney’s office. Doctors associated with Gallups’ ENT practice were pressured into ordering these unnecessary tests from Texas-based lab Next Health.
As part of their agreement with Next Health, the two received half of the net profit from eligible specimens sent from Gallups’ practice to the lab company.
Further, Oxendine gave a presentation at a Georgia Ritz Carlton that involved pressuring doctors in Gallups’ practice to order unnecessary tests from Next Health.
The testing lab later submitted insurance claims totaling more than $2.5 million and received nearly $700,000 because of the fraudulent claims, according to the attorney’s office.
Additionally, some patients were charged as much as $18,000 for the unnecessary tests.
Next Health paid Oxendine and Gallups $260,000 for sending them the business. A portion of this money was used to pay a $150,000 charitable contribution and $70,000 in attorney’s fees.
The two fraudsters concealed the kickback scheme by routing the payments from Next Health through Oxendine Insurance Services, an insurance consulting business operated by the former commissioner.
The fraudulent actions did raise red flags for a compliance officer at Gallups’ practice. Oxendine instructed Gallups to tell the compliance officer that the payments were a loan he had given to the doctor. Gallups then repeated this lie when questioned by federal agents about Next Health, while Oxendine claimed in an Atlanta Journal-Constitution interview that he didn’t work with the lab company and hadn’t received any money from the business.
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“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 release. “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.”
Oxendine’s sentencing is scheduled for July 12, 2024.