(The Center Square) — Georgia’s former state insurance commissioner has pleaded guilty to federal charges that he participated in a health care fraud scheme, prosecutors said Friday.
According to federal authorities, John W. Oxendine, 61, of Johns Creek, Dr. Jeffrey Gallups and others referred unnecessary pharmacogenetic, molecular genetic and toxicology tests to a Texas lab in exchange for kickbacks. Gallups previously pleaded guilty to health care fraud and was sentenced to 36 months in prison, according to reports.
Prosecutors say Oxendine, who served as insurance commissioner from 1995 to 2011, gave a presentation at a Buckhead hotel and pressured doctors in Gallups’ ENT practice to order unnecessary tests. According to a news release, the company agreed to pay Oxendine and Gallups a kickback of half the net profit for eligible specimens that Gallups’ practice submitted to the lab company.
“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 public’s trust.”
According to the feds, Next Health later submitted more than $2.5 million in insurance claims for the unnecessary tests, and the insurance companies paid Next Health almost $700,000, which then paid $260,000 in kickbacks to Oxendine and Gallups. Additionally, some patients also received bills of up to $18,000 for the tests.
Prosecutors allege Oxendine and Gallups had Next Health pay Oxendine’s insurance consulting business, Oxendine Insurance Services, to conceal the kickbacks. Oxendine used some of the money to pay debts for Gallups, including a $150,000 charitable contribution and $70,000 in attorney’s fees, the feds said.
“This scheme to bill for unnecessary services has no place in our health care system,” Keri Farley, special agent in charge of FBI Atlanta, said in a statement. “It not only increased health care 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.”
A federal grand jury indicted Oxendine in May 2022. U.S. District Judge Steve C. Jones is scheduled to sentence Oxendine in July.
