A federal jury has acquitted three physicians and two Russell County businessmen on a charge of conspiring to defraud insurers and public healthcare programs by billing for drug tests that were not necessary, according to defense attorneys.
The jury also found the five not guilty on 82 charges of submitting fraudulent bills but convicted them on 17 similar counts. The jury ruled Friday in federal court in Frankfort.
Defense attorneys said they will ask U.S. District Judge Gregory F. Van Tatenhove to overrule the jury and acquit the men on the 17 charges as well.
“Although there are a few remaining counts to deal with, we feel confident that they will go the way of the other 83 counts, down the drain,” said David Oscar Markus, an attorney who represents Brian C. Walters in the case.
However, acting U.S. Attorney Carlton S. Shier pointed out the jury convicted the men of healthcare fraud.
“Health care fraud victimizes us all, by improperly depleting the critical resource necessary to pay health care costs and, as in this case, by seeing medical professionals brazenly place their financial interests above medical necessity in the treatment of patients,” Shier said.
Those charged in the case were Walters, the former mayor of Russell Springs; businessman James W. “Wes” Bottom; and physicians Robin Peavler, Bryan S. Wood and Robert L. Bertram Jr.
The alleged fraud happened in 2010 and 2011, when Peavler and Wood owned a company called SelfRefind which provided medication-assisted treatment for drug addiction.
The company required patients to submit urine samples, which could be tested to show whether they were taking medication properly.
A laboratory in Russell Springs called PremierTox did the testing. Walters, Bottom and the three doctors were partners in the lab.
When the lab first started receiving samples, it did not have the equipment to do certain tests, so technicians stored the samples in freezers.
Technicians at PremierTox later tested hundreds of the samples that had been stored, and the lab billed insurance providers — including Medicaid, Anthem BlueCross BlueShield, and Bluegrass Family Health — for the work. That happened months after the samples were collected in many cases.
Evidence at the trial showed that PremierTox prioritized the frozen samples for testing based on the ability to get reimbursed for the work, according to a release from Shier.
For instance, the lab tested samples from Medicaid and Medicare patients first because the facility was set up to get payments from those programs, but it wasn’t enrolled as a provider with Anthem until August 2011, so it waited until then to test samples from Anthem members and bill the company, Shier said.
The indictment charged that the late tests were not medically necessary because by the time the samples were tested the results were of no use in treating patients.
Medicaid would pay $1,100 for each test, the indictment said.
Markus and Margot Moss, who also represents Walters, argued in one motion that the orders for the tests remained valid when the lab did finally do the work, and that labs are not required to make independent decisions on the necessity of tests ordered by doctors.
“A lab does not have the ability or authority to second-guess an order from a treating physician,” said attorney Mark Wohlander, who with attorney Brent L. Caldwell represented Bertram. “In fact, as we pointed out throughout the trial, the lab doesn't have access to medical records and could not make a determination of medical necessity.”
Markus also argued that the indictment did not charge that Walters and the others falsified any information or misled insurance companies and healthcare programs.
The maximum sentence on the 17 charges on which the jury found the men guilty would be 10 years.
However, the actual sentence under advisory federal sentencing guidelines — which take a number of factors into account, including the amount of money involved in a crime — would be a maximum of 6 months, defense attorneys said.
Federal judges are not bound by the guidelines.
Wohlander said his concern is that the case could have a chilling effect on other doctors.
“The time has come for the government to use its limited resources to prosecute drug dealers and not those who want to treat drug addiction,” Wohlander said.
The five are to be sentenced in August.
Wood, Peavler, Self-Refind and PremierTox agreed in 2014 to pay a total of $15.7 million to settle a civil case in which the government alleged fraud in drug testing. However, the company and doctors did not admit liability.
Peavler and Wood sold SelfRefind in early 2014 and are no longer involved in the company. The five men charged in the criminal case also sold their interest in PremierTox.