Former Ga. Insurance Commissioner Sentenced To Prison For Fraud

Former Georgia Insurance Commissioner John Oxendine was sentenced to three and a half years in prison Friday for conspiracy to commit health-care fraud in connection with unnecessary lab testing.

Oxendine, 62, pleaded guilty to the charge in federal court in March, admitting that his insurance consulting business ordered the tests from a lab company in Texas in return for hundreds of thousands of dollars in kickbacks, working with a co-conspirator, Dr. Jeffrey Gallups.

A Republican from Gwinnett County now living in Port St. Joe, Fla., Oxendine was elected insurance commissioner in 1994 and served four terms. He ran for governor in 2010 but finished fourth in the GOP primary.

“Oxendine abused his position as the Georgia insurance commissioner by undermining the integrity of the state’s health-care system,” said Ryan Buchanan, U.S. attorney for the Northern District of Georgia. “This case demonstrates our office’s commitment to work with our law enforcement partners to hold individuals accountable who prioritize personal greed at the expense of the public’s trust.”

According to Buchanan and the information presented in federal court, Oxendine and Gallups submitted fraudulent insurance claims for medically unnecessary tests from Next Health, a lab in Texas. Physicians associated with Gallups’ ear, nose, and throat practice were pressured to order the tests.

The lab company agreed to pay Oxendine and Gallups a kickback of 50% of the net profit for eligible specimens Gallups’ practice submitted to the company.

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

Next Health later submitted insurance claims seeking more than $3 million in payments from private health insurers for the unnecessary tests. The insurance companies paid more than $750,000 to Next Health because of these fraudulent claims.

Next Health then paid $260,000 in kickbacks to Oxendine and Gallups. Some patients were also charged for the tests, receiving bills of up to $18,000.

Next Health submitted claims seeking more than $3 million from private health insurers, which paid Next Health more than $750,000. The company then paid $260,000 in kickbacks to Oxendine and Gallups.

When a compliance officer at Gallups’ practice raised concerns about the kickbacks, Oxendine told Gallups to lie and say the payments were loans. He also directed Gallups to repeat the lie after he was questioned by federal agents about Next Health.

When Oxendine was interviewed about Next Health by the Atlanta Journal-Constitution in connection with a private lawsuit, he falsely denied working with the lab company or receiving money from the business.

Oxendine also was sentenced to serve three years of supervised release after he completes the prison term. In addition, he was ordered to pay more than $760,000 in restitution and a $25,000 fine.

“John Oxendine was motivated more by personal greed than his duty to patients and the citizens of Georgia whom he used to represent,” said Special Agent in Charge of the FBI Atlanta office Keri Farley. “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.”