Three doctors and two Russell County businessmen conspired to defraud insurers and public healthcare programs by billing for unnecessary drug tests, a federal grand jury has charged.
The doctors named in the indictment are Robin Peavler, Bryan S. Wood and Robert L. Bertram Jr. They are charged with Brian C. Walters, the former mayor of Russell Springs, and James W. "Wes" Bottom.
All five were indicted on one charge of conspiracy and 99 charges of health care fraud — one each for alleged improper bills submitted to Medicaid, Medicare, Anthem BlueCross BlueShield and Bluegrass Family Health.
Wood flatly denied there was any wrongdoing.
"We are absolutely going to fight the charges because we didn't do anything," Wood said.
Lexington attorney Mark Wohlander said the charges show a misunderstanding by prosecutors of treating drug addicts and the differences in types of drug tests.
"The charges are yet another example of the government attempting to interject itself into medical decisions made by qualified physicians," Wohlander said.
The alleged fraud happened in 2010 and 2011, when Peavler and Wood owned a company called SelfRefind which provided treatment for drug addiction.
Patients were required to submit urine samples to make sure they were taking medication as required.
The clinics used a laboratory in Russell Springs called PremierTox to test the samples.
Walters, Bottom and the doctors agreed to share profits from the lab, the indictment said.
At one point, PremierTox did not have the equipment necessary to do certain tests, so urine samples from SelfRefind patients were stored at the lab in freezers, the indictment said.
Later in 2011, technicians at PremierTox later tested more than a thousand of the samples that had been frozen, and the business billed Medicaid and other providers for the work, according to the indictment.
The indictment charged that those tests were not medically necessary.
It had been months since patients submitted the samples, and the test results were not used in directing treatment for people, the indictment said.
Medicaid would pay about $1,100 for such tests, while Medicare would pay about $600, and the private health plans would pay about $300, the indictment said.
The five men charged in the case each received $600,000 in owner distributions from PremierTox between April and October 2011, and also used profits from the lab to buy a condominium in Colorado for $2 million, the indictment said.
If the five are convicted, the government wants a payment from each equal to what they made from the alleged criminal conduct, and possession of the condo.
The five face a maximum 10-year-prison sentence if convicted, according to U.S. Attorney Kerry Harvey's office.
Harvey said in a release that Peavler, 54, is from Lexington and Wood, 48, is from Danville. Bertram, 47, Walters, 43, and Bottom, 62, are from Russell County, according to Harvey's office.
Wood, Peavler, Self-Refind and PremierTox agreed last year to pay a total of $15.7 million to settle a civil case in which the government alleged fraud in drug testing, but did not admit liability.
Peavler and Wood sold SelfRefind in early 2014 and are not involved in the company, said Joshua Johnson, vice-president and general counsel.
SelfRefind operates addiction-treatment clinics in 16 Kentucky cities and in Ohio.
PremierTox also is under new ownership and management; the men charged in the indictment sold the lab in 2014, said its attorney, Anna Whites.