BREAKING: Georgia’s former insurance commissioner pleads guilty to fraud

Former Georgia insurance commissioner and gubernatorial candidate John Oxendine pleaded guilty Friday in a federal case charging him with participating in a health care fraud scheme.

Oxendine, 61, pleaded guilty to one count of conspiracy to commit health care fraud. He has agreed to pay $699,864 in restitution as part of a plea deal with prosecutors.

I’m here to plead guilty, Oxendine told a federal judge when asked why he was in court Friday.

He faces up to 10 years in prison. His sentencing has been set for July 12. He remains free on bail.

Oxendine was scheduled to stand trial in April on one count each of conspiracy to commit health care fraud and conspiracy to commit money laundering. The judge had rejected Oxendines’ attempt to dismiss the criminal charges and set an April 15 trial date.

Prosecutors agreed to dismiss the money laundering charge under the plea agreement.

Oxendine also faces up to three years of supervision and a hefty fine.

Oxendine served as insurance commissioner for 16 years before launching an unsuccessful campaign for the Republican nomination for governor in 2010. He was indicted in May 2022, when he pleaded not guilty and was released on bail $100,000 signature.

Prosecutors alleged that Oxendine helped an Alpharetta doctor defraud health insurance providers and received tens of thousands of dollars in kickbacks. They said the settlement between 2015 and 2017 involved fraudulent insurance claims for medically unnecessary genetic and toxicology tests by Texas lab company NextHealth.

Physician Jeffrey Gallups, owner of a chain of medical clinics in the Atlanta area, was sentenced in June 2022 to three years in prison for ordering doctors who worked at his Ear Institute clinics, nose and throat require unnecessary laboratory tests for patients. Gallups had a secret deal with NextHealth to split the money generated by the tests, prosecutors said.

Oxendine was accused of being a middleman in receiving through his insurance business the hundreds of thousands of dollars in kickbacks that the lab company paid to Gallups. Oxendine kept more than $40,000 and used the rest to pay off doctors’ debts and charitable donations, prosecutors alleged.

Prosecutor Chris Huber said Friday that Oxendine came up with the idea to collect the kickbacks, after NextHealth and Gallups raised concerns about the direct payments. Huber said Oxendine also took the lead in talks with NextHealth.

Gallups, who pleaded guilty to filing fraudulent insurance claims, was ordered to pay more than $700,000 in restitution and was fined $25,000. In a separate civil case, Gallups and his company, Milton Hall Surgical Associates, agreed to pay just over $3 million to settle a federal whistleblower lawsuit alleging the scheme defrauded government health programs . The settlement amount was increased to $5.3 million due to late payments.

Prosecutors said Oxendine pressured doctors at Gallups’ clinics to order the lab tests during a speech at a Buckhead hotel in September 2015. There was considerable resistance from doctors who were instructed to order tests for patients, including all new patients and all those with scheduled procedures, Huber said. .

Mr. Oxendine spoke for about an hour, Huber said of the hotel event. He threatened doctors with liability if they did not order the tests.

Drew Findling, Oxendine’s lead attorney, said Oxendine admonished, but did not threaten, the doctors during the speech.

Prosecutors said NextHealth filed claims for more than $2.5 million in payment for tests ordered by Gallups’ practice and received more than $600,000 from insurance companies as a result. Some patients were billed as much as $18,000 for tests, Huber said.

Oxendine told Gallups to falsely label the kickback payments as loans, after a compliance officer with Gallups’ practice raised concerns, Huber said. He said Oxendine also lied to AJC reporters when asked in 2018 about his involvement with NextHealth.

NextHealth was involved in a massive civil fraud lawsuit filed by UnitedHealthcare in federal court in Texas. In that case, NextHealth and its associates were ordered to pay more than $218 million by June 2023.

Oxendine has also faced allegations of campaign finance mismanagement. In May 2022, the Georgia ethics commission settled the last of its cases against Oxendine in exchange for about $128,000 in donor money.

Oxendine is the second former insurance commissioner to face criminal charges in federal court in recent years.

Jim Beck is serving more than seven years behind bars after being sentenced in 2021 for embezzling more than $2 million from the Georgia Underwriting Association, his former employer. Prosecutors said the money helped finance Becks’ successful campaign for office in 2018. Becks’ attempt to overturn his conviction was rejected in August 2023 by the appeals court Atlanta federal union.

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