NASHVILLE, Tenn. – July 10, 2020 – A Tennessee healthcare executive was sentenced to 42 months in prison yesterday for his role in an approximately $4 million kickback scheme.
U.S. Attorney Don Cochran, Acting Assistant Attorney General Brian Rabbitt of the Justice Department’s Criminal Division, Special Agent in Charge Derrick Jackson of the U.S. Department of Health and Human Services Office of Inspector General’s (HHS-OIG) Atlanta Region, Special Agent in Charge John F. Khin of the U.S. Department of Defense Criminal Investigative Service’s (DCIS) Southeast Field Office, and Director David Rausch of the Tennessee Bureau of Investigation (TBI) made the announcement.
John Davis, 42, of Franklin, Tennessee, the former CEO of Comprehensive Pain Specialists (CPS) of Gallatin, Tennessee, was sentenced by U.S. District Judge William Campbell, Jr., of the Middle District of Tennessee. Judge Campbell also ordered Davis to forfeit $770,036.00. Davis was convicted of one count of conspiracy to defraud the United States and violate the Anti-Kickback Statute as well as seven counts of violating the Anti-Kickback Statute in April 2019 after a seven-day trial.
According to evidence presented at trial, Davis abused his position as CEO of CPS to arrange for referrals of Medicare Durable Medical Equipment (DME) orders to his co-conspirator, Brenda Montgomery and her company, CCC Medical. Evidence showed that Davis operated a shell company called ProMed Solutions (ProMed), which he had registered in the name of his wife. Davis received over $770,000 in illegal kickbacks disguised as payments to his wife and ProMed. Together, Davis and Montgomery pocketed over $2.9 million dollars in improper reimbursements from Medicare. Davis used company funds from CPS to pay bonuses to providers who ordered DME for Medicare beneficiaries and referred those orders to CCC Medical. Davis received 60% of the Medicare profit from these referrals, while the company he ran lost the opportunity to bill for these services.
Evidence at trial also showed that in April and May of 2015, Davis became concerned about the size of the kickback payments that he was receiving from CCC Medical. To address this concern, Davis and Montgomery engaged in a sham sale of ProMed, which had no assets, no employees, no equipment, no office space, and no customers other than CPS. Evidence further showed that Davis and Montgomery set the price for the sham sale based upon the average monthly kickbacks that Davis had been paid for the previous 8 months. When CPS referrals slowed, Davis agreed to reduce the purported “purchase price” to $150,000. When Davis received the last check for the sham sale, he began cutting off referrals to CCC Medical.
Montgomery pleaded guilty on January 7, 2019, to one count of conspiracy to defraud the United States and violate the Anti-Kickback Statute, and seven counts of violations of the Anti-Kickback Statute. She is currently serving a 42-month prison sentence.
This case was investigated by HHS-OIG, with the support of the Defense Criminal Investigative Service, the Internal Revenue Service – Criminal Investigation, and the Tennessee Bureau of Investigation Medicaid Fraud Control Unit, and was brought as part of the Medicare Fraud Strike Force. Assistant U.S. Attorney Taylor J. Phillips and Trial Attorney Anthony Burba of the Criminal Division’s Fraud Section are prosecuting the case.
The Fraud Section leads the Medicare Fraud Strike Force. Since its inception in March 2007, the Medicare Fraud Strike Force, which maintains 15 strike forces operating in 24 districts, has charged more than 4,200 defendants who have collectively billed the Medicare program for approximately $19 billion. In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.