Former Georgia Insurance Commissioner pleads guilty to health care fraud scheme, USAO says

Former Georgia State Insurance Commissioner John W. Oxendine pled guilty to charges of entering a conspiracy to commit healthcare fraud on Friday.

According to the announcement by the U.S. Department of Justice, Oxendine and a co-conspirator referred unnecessary medical tests to a lab company in Texas to enrich themselves through hundreds of thousands of dollars in kickbacks.

U.S. Attorney Ryan K. Buchanan said, as presented in court, Oxendine conspired with Dr. Jeffrey Gallups to submit fraudulent insurance claims for medically unnecessary testing procedures.

In return for directing the tests, Oxendine and Gallups were given a 50% kickback for the net profit earned by Next Health, a Texas-based testing lab.

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In connection with the healthcare scheme, the USDOJ said Oxendine gave a presentation at a Buckhead Ritz Carlton, where he pressured doctors in Gallups’ medical practice to order unnecessary tests for the scheme.

Then, Next Health submitted insurance claims for more than $2.5 million from health insurance companies for the tests, according to the USDOJ.

“John Oxendine, as the former state-wide insurance commissioner, knew the importance of honest dealings between doctors and insurance companies,” Buchanan said. “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.”

Overall, Next Health paid Oxendine and Gallups $260,000. Some of the patients impacted by the scheme were billed for as much as $18,000, the Justice Department said.

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As part of the scheme, to conceal the kickback payments, the USDOJ said Oxendine and Gallups arranged for payments to be made from Next Health to Oxendine Insurance Services, the former commissioner’s insurance consulting business. Then, Oxendine would use part of the money to pay debts owed by Gallups, including a $150,000 charitable contribution and $70,000 in attorney’s fees.

When a compliance officer at Gallups’ medical practice raised concerns about the kickbacks, officials said Oxendine told Gallups to lie and say the payments between the two men were loans.

Gallups was told to lie to federal agents by Oxendine while they investigated Next Health.

“This scheme to bill for unnecessary services has no place in our healthcare system,” Keri Farley, Special Agent in Charge of FBI Atlanta, said. “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.”

During an interview with an Atlanta news outlet, the USDOJ said Oxendine was asked about Next Health in relation to a private lawsuit and the former insurance commissioner “falsely denied working with the lab company or receiving money from the business.”

Gallups pled guilty to healthcare fraud related to this scheme, according to the USDOJ. Now that Oxendine has pled guilty, he’s scheduled to be sentenced on July 12.

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