Former Georgia insurance commissioner and gubernatorial candidate John Oxendine was sentenced Friday to 3½ years in prison in a federal case accusing him of taking part in a $3 million health care fraud scheme. He told an Atlanta judge that his actions were “stupid, stupid, stupid.”
Oxendine, 62, also was fined $25,000 and ordered to pay more than $760,000 in restitution. He will be subject to three years of supervision upon release from prison. He can stay on bond until ordered to surrender to federal prison authorities.
Oxendine pleaded guilty in March to one count of conspiracy to commit health care fraud as part of a deal with prosecutors, who wanted him to spend three years and eight months in prison and pay a $700,000 fine.
“I screwed up,” Oxendine told U.S. District Judge Steve C. Jones. “I’m sorry. I’m so ashamed of what I did.”
He 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.
Oxendine served as insurance commissioner for 16 years before launching an unsuccessful campaign for the Republican nomination for governor in 2010. His attorneys told the court he was just a middleman in the scheme orchestrated by Alpharetta physician Jeffrey Gallups, who pleaded guilty pre-indictment to submitting fraudulent insurance claims. Gallups was sentenced in June 2022 to three years in prison, ordered to pay over $700,000 in restitution and fined $25,000.
The scheme intended to net $3 million and resulted in a loss to insurance companies of $760,454.
Oxendine, an attorney and insurance consultant, told the judge that he just wanted to please Gallups, who at the time was a friend and client. He said he didn’t have any excuses for his actions.
“I got it wrong,” he said. “I just didn’t want to say ‘no’ to somebody, and it was just stupid. It’s my fault. I was the lawyer.”
Jones said Oxendine’s involvement in the scheme to cheat and steal was intentional. He said Oxendine, who claimed to be “helping the little guy” as insurance commissioner, wound up “hurting the little guy” instead.
“You may not have been the leader, but you knew on day one that Dr. Gallups approached you with this it was wrong,” the judge told Oxendine. “It wasn’t a mistake.”
Prosecutors said Oxendine received about $40,000 in kickbacks by helping Gallups defraud health care insurance providers. They said the arrangement between 2015 and 2017 involved fraudulent insurance claims for medically unnecessary genetic and toxicology testing by Texas lab company NextHealth.
Oxendine made the fraud a reality after Gallups had trouble convincing NextHealth to be involved, prosecutors said. They said Oxendine also pressured doctors to order the unnecessary tests in a speech at the Ritz-Carlton hotel in Atlanta, claiming they’d otherwise face liability.
“He told the owner of NextHealth that he was the former insurance commissioner and that he could get any insurance company on the phone and get any insurance claim paid,” prosecutor David O’Neal told the judge. “He used his skills an an attorney to scare those doctors into ordering medically unnecessary tests.”
Gallups directed the doctors at his Ear, Nose & Throat Institute clinics to req
uire the unnecessary lab tests for patients. He arranged with NextHealth to split the money generated by the tests, for which some patients were billed as much as $18,000.
Oxendine received through his insurance business the hundreds of thousands of dollars in kickbacks that the lab company gave Gallups, keeping about $40,000. He used the rest of the money to pay the doctor’s debts and charitable donations, prosecutors alleged.
Oxendine told Gallups to falsely label the kickback payments as loans, after a compliance officer with Gallups’ practice raised concerns, prosecutors said. They said Oxendine also lied to AJC reporters when questioned in 2018 about his involvement with NextHealth.
Prosecutor Christopher Huber said Oxendine “had the world at his fingertips” but chose to defraud the companies he licensed and regulated as insurance commissioner.
“He should have stopped this scheme instead of designing it,” Huber said. “He should have reported the kickbacks instead of hiding them.”
Oxendine was indicted in May 2022, when he pleaded not guilty and was released on a $100,000 signature bond. He was due to stand trial in April on single counts of conspiracy to commit health care fraud and conspiracy to commit money laundering. Prosecutors agreed to dismiss the money laundering charge under the plea deal.
Drew Findling, an attorney for Oxendine, said Oxendine would pay $100,000 toward the restitution by the end of Friday.
Gallups and his company, Milton Hall Surgical Associates, agreed to pay just over $3 million to settle a related civil case. The settlement amount was increased to $5.3 million due to late payments. Prosecutors said Friday that Gallups, who filed for bankruptcy, had paid less than $200 to date.
In a civil fraud case in Texas, 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 provided about 60 support letters to the court describing his good character, including those from former insurance commissioners of other states, former U.S. Rep. Bob Barr, Fulton County Superior Court Judge Craig Schwall and pastor Johnny Hunt, who served as the president of the Southern Baptist Convention.
His wife, Ivy Oxendine, said during the sentencing hearing that he is a nurturing husband and father who regrets his part in the fraud.
“John betrayed his oath to act justly and rightly,” she said. “I know it’s an ache in his heart that his actions are going to change our family forever.”
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