Financial Crime World

Former Georgia Insurance Commissioner John W. Oxendine Arrested on Health Care Fraud Charges

In a shocking turn of events, on Tuesday, March 21, 2023, the Federal Bureau of Investigation (FBI) took former Georgia State Insurance Commissioner John W. Oxendine into custody in Atlanta on health care fraud charges.

Indictment and Allegations

According to the indictment, Oxendine, 61, of Johns Creek, conspired with local physician, Dr. Jeffrey Gallups, to refer unwarranted medical tests to a Texas-based lab company, Next Health. In exchange, they received kickbacks totaling hundreds of thousands of dollars.

Scheme Details

The indictment alleges that Oxendine and Dr. Gallups orchestrated a scheme to submit fraudulent insurance claims for medically unnecessary Pharmacogenetic, Molecular Genetic, and Toxicology testing. They pressured physicians associated with Dr. Gallups’ ENT practice to order these unnecessary tests from Next Health, thereby raking in half of the net profits on eligible specimens.

Key Points:

  • Oxendine and Dr. Gallups conspired to submit fraudulent insurance claims.
  • Physicians in Dr. Gallups’ practice were pressured to order unnecessary tests.
  • Next Health agreed to pay kickbacks for eligible specimens.

Reactions and Consequences

U.S. Attorney Ryan K. Buchanan strongly condemned Oxendine’s actions, stating:

John Oxendine betrayed the trust of the state and the public he served as insurance commissioner. By orchestrating a scheme to order unnecessary lab tests, he knowingly defrauded insurance companies and increased healthcare costs for all beneficiaries.

FBI Atlanta Special Agent in Charge Keri Farley added:

This fraudulent scheme not only harmed taxpayer-funded healthcare programs but undermined the trust between doctors, insurance companies, and patients. The FBI remains committed to uncovering and investigating such malfeasance.

Egregious Turn of Events

The fraudulent scheme took a particularly unsavory turn when it surfaced that Oxendine requested a presentation at the Ritz Carlton in Buckhead to pressure doctors in Dr. Gallups’ practice to order the unnecessary tests. Once the fraudulent claims reached nearly $2.5 million, insurance companies paid almost $700,000 to Next Health, $250,000 of which went directly to Oxendine and Dr. Gallups as kickbacks.

Key Points:

  • Oxendine requested a presentation to pressure doctors for unnecessary tests.
  • Fraudulent claims totaled nearly $2.5 million.
  • Insurance companies paid almost $700,000 to Next Health, of which the pair received $250,000 in kickbacks.

Cover-Up Attempts

To conceal their transactions, Oxendine and Dr. Gallups arranged for the kickbacks to be funneled to Oxendine Insurance Services, a consulting business owned by the former commissioner. This money was then used to pay off Dr. Gallups’ debts, including a $150,000 charitable contribution and $70,000 in legal fees.

Key Points:

  • Kickbacks were funneled through Oxendine Insurance Services.
  • Money was used to pay off Dr. Gallups’ debts.

Lies and False Claims

When a compliance officer at Dr. Gallups’ practice raised concerns about the kickbacks, Oxendine instructed Dr. Gallups to lie and claim the payments were loans. When interviewed by federal agents about Next Health and in an Atlanta Journal-Constitution article during a private lawsuit, the ex-commissioner repeated these lies, further fueling suspicions.

Collaborative Investigation

This case is related to United States v. Gallups, a health care fraud case in which Dr. Jeffrey Gallups has pleaded guilty. The investigation is a collaborative effort between the Federal Bureau of Investigation, the U.S. Department of Health and Human Services Office of the Inspector General, and the Defense Criminal Investigative Service. Assistant U.S. Attorneys Christopher J. Huber and David A. O’Neal are prosecuting the case.

Upcoming Sentencing

Sentencing for John W. Oxendine is scheduled for July 12, 2024, before U.S. District Judge Steve C. Jones.

For Additional Information

For additional information, contact the U.S. Attorney’s Public Affairs Office at USAGAN.PressEmails@usdoj.gov or (404) 581-6280. The U.S. Attorney’s Office for the Northern District of Georgia website is http://www.justice.gov/usao-ndga.