Five partners in a Russell County drug-testing lab have been sentenced to prison terms after being convicted in a health care fraud case.
Those charged in the case were physicians Bryan S. Wood, Robin Peavler and Robert L. Bertram; former Russell Springs Mayor Brian C. Walters; and Russell County businessman James W. “Wes” Bottom.
U.S. District Judge Gregory F. Van Tatenhove sentenced Wood and Bertram each to 21 months in prison; Walters and Peavler each to 18 months; and Bottom to 13 months, according to the office of U.S. Attorney Robert M. Duncan Jr.
Defense attorneys said all five will appeal their convictions.
The men remained free after the sentencing Monday in federal court in Frankfort.
Van Tatenhove set a date for them to report to prison next year, but invited them to file requests to remain free on bond while their appeal is pending, according to defense attorneys.
The five were charged with defrauding public and private health insurers in 2010 and 2011 by billing for drug tests that allegedly were not medically necessary.
At the time, Peavler and Wood owned a company called SelfRefind which provided medication-assisted treatment for drug addiction.
Patients submitted urine samples to make sure they were taking medication as required. The samples were tested at a lab in Russell County called PremierTox, owned by the five men charged in the fraud case.
There was a period when PremierTox did not have the equipment necessary to do certain tests, so the lab stored urine samples in freezers in a rented area at a strip shopping center dubbed the “Pee Palace,” prosecutors said in a court record.
After PremierTox got the necessary equipment, technicians tested more than a thousand of the samples and the lab billed insurance providers for the work, according to the indictment in the case.
The indictment charged that the tests were unnecessary and were not used in helping treat people because the results came so late.
Defense attorneys argued there was no evidence the five men intended to defraud insurance providers and that the government was trying to impose its judgment on the medical necessity of tests over that of physicians.
Jurors acquitted the five on 83 of the 100 charges against them, including the most serious conspiracy charge.
“Brian and the other four defendants are really good men. I am proud of them that they stood up to a false prosecution,” said Walters’ attorney, David Oscar Markus.
However, prosecutors said the case was about the defendants’ greed, not treating people battling drug addiction.
“They chose to capitalize on the addiction epidemic in Kentucky and to exploit people who needed help so they could fly on private jets and enjoy ski vacations in Colorado,” Assistant U.S. Attorneys Kate K. Smith and Paul McCaffrey said in one court document.
Wood, Peavler, PremierTox and SelfRefind agreed in 2014 to pay a total of $15.7 million to settle a separate civil case in which the government alleged fraud in drug testing.
Wood and Peavler sold their interests in SelfRefind in 2014. They and the three others charged in the criminal case also are no longer involved with PremierTox.