Georgia State Official Committed Healthcare Fraud, Headed to Prison

The former Insurance Commissioner for the state of Georgia was sentenced last week to three and a half years in prison for his role in a healthcare fraud scheme surrounding needless pharmacogenetic, toxicology and molecular genetic tests. John Oxendine, of Port St. Joe, Florida, was the Georgia state Insurance Commissioner between 1995 and 2011.

Oxendine pled guilty in March for conspiring with Dr. Jeffrey Gallups, among others, to have various physicians order tests from a Texas-based lab, Next Health, who then submitted them for insurance claims, according to a Department of Justice press release.

“John Oxendine was motivated more by personal greed than his duty to patients and the citizens of Georgia whom he used to represent,”

Keri Farley, Special Agent in Charge of FBI Atlanta, said in the press release.

“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 FBI will continue to investigate healthcare fraud to ensure those who abuse the system are brought to justice.”

Kickbacks and Fraudulent Claims

Both Oxendine and Gallups were then paid half of the lab’s net profits as a kickback. At one point, a presentation was held at the Ritz Carlton in Atlanta’s upscale Buckhead neighborhood, where Oxendine attempted to persuade doctors in Gallups’ practice to issue tests to Next Health regardless of whether they were needed.

Next Health submitted over $3 million in fraudulent claims to private health insurance companies for the needless tests, and in turn, those insurance companies paid out $750,000 to Next Health. Oxendine and Gallups then received $260,000 from Next Health as part of their agreement. Some charges were actually billed directly to patients, with some people on the hook for as much as $18,000 for tests that they did not even need, according to prosecutors.

In an attempt to hide the payments, Next Health funneled money through Oxendine’s consulting business, Oxendine Insurance Services. From June 2016 to June 2017, Next Health made payments almost monthly to Oxendine’s consulting business totaling over $264,000. To compensate Gallups, Oxendine donated $150,000 to charity and covered a $70,000 payment to a law firm, according to the indictment.

Concerns about the payments were brought forward by a compliance officer at the medical practice of Gallups, Oxendine then told them to say they were loans, not payments, which was a lie. Oxendine then told Gallups to say the same thing when he was interrogated by federal agents. Later, in an interview with the Atlanta Journal-Constitution Oxendine denied working with Next Health or receiving any payments from them.

Sentenced to Federal Prison

In all, Oxendine was sentenced to 42 months in prison, followed by three years of supervised release. He was given a $25,000 fine and ordered to pay $760,175, according to sentencing minutes. Prosecutors recommended 44 months in prison and $700,000 in restitution, although Oxendine’s lawyers felt this was excessive.

“Mr. Oxendine is not able to pay a $700,000 fine, and to require as much would constitute cruel and unusual punishment under the Eight Amendment to the United States Constitution,” Drew Findling and Marissa Goldberg, Oxendine’s attorneys, wrote in a sentencing memorandum, according to Insurance Journal.

In hopes of persuading the judge to issue a lighter sentence, Oxendine’s lawyers submitted a 92-page memo to the court highlighting his achievements during his stint as insurance commissioner. The memo included character references from numerous other insurance commissioners, a former Congressman, a former state fire marshal and many others, although apparently, that didn’t seem to sway the courts very much.