On May 17, 2022, a federal grand jury indicted former Georgia Insurance Commissioner John Oxendine on charges of conspiracy to commit health care fraud and conspiracy to commit money laundering. According to the indictment, Oxendine conspired to obtain kickbacks for unnecessary genetic and toxicology lab tests, using his insurance business to hide those kickbacks.
According to the Department of Justice (DOJ), Oxendine allegedly conspired with Dr. Jeffrey Gallups and others to submit fraudulent insurance claims to Aetna, Blue Cross Blue Shield, United Healthcare, and others, for medically unnecessary Pharmacogenetic, Molecular Genetic, and Toxicology testing.
According to the indictment, physicians associated with Dr. Gallups’ ENT practice were pressured to order medically unnecessary Pharmacogenetic, Molecular Genetic, and Toxicology testing from a testing lab in Texas. As part of the health care fraud scheme, the lab company 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 for the testing. The lab company paid the kickbacks to Oxendine, who then paid them to Gallups. Oxendine also retained a portion of the kickbacks and used a portion of the kickback money to pay debts of Gallups.
Around September 2015, Dr. Gallups’ practice held a meeting at the Ritz Carlton in Buckhead. During that meeting, Oxendine gave a speech where he allegedly told the physicians that they needed to order the Pharmacogenetic, Molecular Genetic, and Toxicology testing for their patients.
Around December 2015, Dr. Gallups allegedly entered into a business associate agreement and an Independent Contractor Agreement with the lab company on behalf of his medical practice. Attached to the Independent Contractor Agreement were exhibits for Pharmacogenetics & Molecular Genetics Marketing Commission Terms and Toxicology and Drug Screening Marketing Commission Terms, which stated that Dr. Gallups’ medical practice would receive 50% of the net profit for lab testing that was performed by the lab company.
Around May 2016, Oxendine allegedly entered into similar contracts with the lab company on behalf of his insurance services business. His Independent Contractor Agreement also had exhibits attached, including exhibits for Pharmacogenetics & Molecular Genetics Marketing Commission Terms and Toxicology and Drug Screening Marketing Commission Terms. The Commission Terms changed the payment of the 50% kickback from Dr. Gallups’ practice to Oxendine’s insurance services business.
In total, the lab company submitted claims seeking over $2,500,000 in payment for laboratory tests ordered by Gallups’ practice. The insurance companies paid more than $600,000 to the lab company because of these claims. The lab company then paid $260,000 in kickbacks through Oxendine’s insurance services business, starting with a $227,066.56 check in June 2016, with smaller checks coming regularly thereafter through June 2017. Oxendine used a portion of the kickback money to pay debts on behalf of Gallups, including a $150,000 charitable contribution and nearly $71,000 in attorney’s fees. Oxendine allegedly kept more than $40,000 of the payments from the lab company after paying Gallups.
“These allegations describe someone who was more motivated by personal greed than their duty to provide appropriate and necessary care to patients,” said Keri Farley, Special Agent in Charge of FBI Atlanta. “The FBI, along with our partners, will continue to investigate healthcare fraud to ensure these individuals who willingly defraud the American people are brought to justice.”