Former Georgia Insurance Commissioner John Oxendine pleads guilty to health care fraud

A former Georgia insurance commissioner who made a failed Republican bid for governor has pleaded guilty to conspiracy to commit health care fraud.

John W. Oxendine of Johns Creek pleaded guilty Friday in federal court in Atlanta. The 61-year-old had been charged in May 2022 with conspiracy to commit health care fraud and conspiracy to commit money laundering.

The crime is punishable by up to 10 years in prison, but Oxendine is likely to be sentenced to less. Federal sentencing guidelines discussed in the agreement suggest that prosecutors will recommend that Oxendine be sentenced to between 4 years, 3 months and 5 years, 3 months, depending on what U.S. District Judge Steve Jones decides at a sentencing hearing set for July 12. Jones could also fine Oxendine and order him to serve supervised release.

Oxendine also agreed to pay nearly $700,000 in restitution to health insurers who lost money in the scheme, according to the filing. Prosecutors agreed to dismiss the money laundering charge as part of the plea.

John Oxendine, as a former statewide 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 gain he willingly conspired with a doctor to order hundreds of unnecessary lab tests, costing hundreds of thousands of dollars.

Prosecutors say Oxendine conspired with Dr. Jeffrey Gallups to pressure other doctors who practiced with Gallups to order unnecessary medical tests from Next Health, a Texas lab. Prosecutors said Oxendine pushed the plan in a September 2015 presentation to doctors who worked for Gallups’ practice.

The lab company, Oxendine and Gallups agreed that the company would pay Gallups 50 percent of the profits from the tests, Oxendine’s indictment said. Next Health paid $260,000 in kickbacks through insurance consulting firm Oxendines, prosecutors said. Oxendine paid a $150,000 charitable contribution and $70,000 in attorneys’ fees on Gallups’ behalf, prosecutors said, keeping $40,000 for himself.

Some patients were also charged and received bills of up to $18,000 for the tests, prosecutors said.

Prosecutors said Oxendine told Gallups to lie and that Oxendine’s payments were loans when questioned by a compliance officer at Gallups’ company. Oxendine told Gallups to repeat the same lie when questioned by federal agents, prosecutors said. And they said Oxendine falsely said he did not work with the lab company or get money from Next Health when interviewed by The Atlanta Journal-Constitution.

Gallups pleaded guilty in October 2021 to one count of health care fraud after he waived the charge. Gallups was sentenced to three years in prison in June 2022. He was also ordered to pay $700,000 in restitution and was fined $25,000.

In 2021, Gallups agreed to pay $3 million after a whistleblower filed a lawsuit alleging Gallups defrauded the federal government through the Next Health plan and a kickback scheme with an independent medical device company. That amount was raised to nearly $5.4 million in March because Gallups and his company, Milton Hall Surgical Associates, failed to pay the original amount within a year.

Next Health has faced other allegations of fraud. The company and related individuals and entities were ordered to pay health insurer UnitedHealth $218 million in a Texas lawsuit in 2023.

Oxendine served as an elected state insurance commissioner from 1995 to 2011. He ran for governor in 2010, but lost the Republican primary. The state ethics commission began investigating and prosecuting campaign finance cases against him in 2009, alleging that Oxendine violated state law by using campaign funds to buy a house, lease luxury cars and join to a private club.

Oxendine settled that case with the Georgia Ethics Commission in 2022, agreeing to turn over the remaining $128,000 of his campaign fund without admitting any wrongdoing.

He was also accused of accepting a joint contribution of $120,000, 10 times the legal limit, from two Georgia insurance companies in 2008 when he was running for governor. A judge ruled that state officials waited too long to prosecute Oxendine on those charges.

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