Former Georgia insurance commissioner charged with running health care fraud scheme

A federal grand jury has indicted a former Georgia insurance commissioner on charges of running a health care fraud and money laundering scheme.

John W. Oxendine, 60, of Duluth, faces federal charges of conspiracy to commit health care fraud and conspiracy to commit money laundering. The former insurance commissioner "conspired to obtain kickbacks for unnecessary genetic and toxicology lab tests, and used his insurance business to hide those kickbacks," U.S. Attorney Ryan K. Buchanan said in an announcement.

The feds allege Oxendine conspired with Dr. Jeffrey Gallups and others to submit fake insurance claims for "medically unnecessary" tests and that physicians associated with Gallups' practice were pressured to order the tests from a Texas lab. The feds say the lab company agreed to pay Oxendine and Gallups 50% of the net profit for eligible specimens Gallups' practice submitted to the lab company.

The lab company submitted claims for more than $2.5 million for tests Gallups' practice ordered. The insurance companies paid the lab more than $600,000.

According to a news release, the lab company paid $260,000 in kickbacks through Oxendine's insurance services business. The feds say Oxendine used a portion of the money to pay Gallups' debts, making a $150,000 charitable contribution and paying $70,000 in attorney's fees.

"These allegations describe someone who was more motivated by personal greed than their duty to provide appropriate and necessary care to patients," Keri Farley, special agent in charge of the FBI's Atlanta office, said in an announcement. "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."

In October, Gallups, the founder, owner, medical director and past CEO of Milton Hall Surgical Associates, also known as The Ear, Nose & Throat Institute, pleaded guilty to health care fraud.

In December, Gallups agreed to pay more than $3 million to resolve allegations of violating the False Claims Act. According to a news release, another company, Entellus Medical, agreed to pay $1.2 million as part of the settlement.

Oxendine served as insurance commissioner from 1995 to 2011.