Former Georgia insurance commissioner and gubernatorial candidate John Oxendine pleaded guilty Friday in a federal case accusing him of taking part 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 restitution of $699,864 as part of a plea agreement 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 bond.
Oxendine was due to stand trial in April on single counts of conspiracy to commit health care fraud and conspiracy to commit money laundering. The judge had rejected Oxendine’s attempt to dismiss the criminal charges and set an April 15 trial date.
Prosecutors agreed to dismiss the money laundering charge under the plea deal.
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 a $100,000 signature bond.
Prosecutors alleged that Oxendine helped an Alpharetta doctor defraud health care insurance providers and received tens of thousands of dollars in kickbacks. They said the arrangement between 2015 and 2017 involved fraudulent insurance claims for medically unnecessary genetic and toxicology testing by Texas lab company NextHealth.
Physician Jeffrey Gallups, who owned a chain of Atlanta-area medical clinics, was sentenced in June 2022 to three years in prison for ordering doctors who worked at his Ear, Nose & Throat Institute clinics to require unnecessary lab tests for patients. Gallups had a secret arrangement with NextHealth to split the money generated by the tests, prosecutors said.
Oxendine was accused of being a middleman by receiving through his insurance business the hundreds of thousands of dollars in kickbacks that the lab company paid Gallups. Oxendine kept more than $40,000 and used the rest to pay the doctor’s debts and charitable donations, prosecutors alleged.
Prosecutor Chris Huber said Friday that Oxendine came up with the idea of collecting the kickbacks, after NextHealth and Gallups expressed concerns about direct payments. Huber said Oxendine also “took the lead” in discussions with NextHealth.
Gallups, who pleaded guilty to submitting fraudulent insurance claims, was ordered to pay more than $700,000 in restitution and 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 bilked government health care programs. The settlement amount was increased to $5.3 million due to late payments.
Prosecutors said Oxendine pressured doctors in Gallups’ clinics to order the lab tests during a speech at a Buckhead hotel in September 2015. There was considerable resistance from doctors 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 didn’t order the tests.”
Drew Findling, Oxendine’s lead attorney, said Oxendine admonished, but did not threaten, doctors during the speech.
Prosecutors said NextHealth submitted claims for more than $2.5 million in payment for tests ordered by Gallups’ practice, and that it 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 questioned in 2018 about his involvement with NextHealth.
NextHealth was embroiled in a massive civil fraud lawsuit filed by UnitedHealthcare in a Texas federal court. In that case, NextHealth and associates were ordered to pay more than $218 million in June 2023.
Oxendine has also faced accusations of campaign finance mismanagement. In May 2022, Georgia’s 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 convicted in 2021 of embezzling more than $2 million from the Georgia Underwriting Association, his former employer. Prosecutors said the money helped finance Beck’s successful campaign for office in 2018. Beck’s attempt to overturn his conviction was rejected in August 2023 by the federal appeals court in Atlanta.
About the Author
