Former Georgia Insurance Commissioner John Oxendine Pleads Guilty in Healthcare Fraud Scheme

John W. Oxendine, the former Georgia State Insurance Commissioner, pleaded guilty to conspiracy to commit health care fraud in which a co-conspirator and he referred unnecessary medical tests to a lab company in Texas in return for hundreds of thousands of dollars in kickbacks.                                                                                                       

“John Oxendine, as the former state-wide insurance commissioner, knew the importance of honest dealings between doctors and insurance companies,” said U.S. Attorney Ryan K. Buchanan. “But for personal profit he willfully conspired with a physician to order hundreds of unnecessary lab tests, costing hundreds of thousands of dollars. He will now be held accountable for violating the public’s trust.”

“This scheme to bill for unnecessary services has no place in our healthcare system,” said Keri Farley, Special Agent in Charge of FBI Atlanta. “It not only increased healthcare costs for all beneficiaries, but they also violated the trust of patients. John Oxendine not only profited from this scheme but took it a step farther and directed another to lie to federal agents to try and cover up the fraud.”

“Individuals who participate in kickback schemes risk undermining the integrity of federal health care programs,” said Special Agent in Charge Tamala E. Miles, U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG). “We will continue to aggressively investigate anyone engaging in illicit activities to protect taxpayer-funded federal health care programs from abuse by bad actors.”

“Today’s plea should serve as a strong deterrent to those in positions of power who seek to exploit and defraud TRICARE, the military’s healthcare system relied on by our service members, retirees, and their families,” said Special Agent-in-Charge Darrin K. Jones, Department of Defense Office of Inspector General, Defense Criminal Investigative Service (DCIS), Southeast Field Office.  “This investigation is part of an ongoing effort by the Defense Criminal Investigative Service to work with our law enforcement partners and aggressively investigate allegations of healthcare fraud that affect the Department of Defense and put its personnel at risk.” 

According to U.S. Attorney Buchanan, the charges and other information presented in court: John Oxendine conspired with Dr. Jeffrey Gallups and others to submit fraudulent insurance claims for medically unnecessary Pharmacogenetic, Molecular Genetic, and Toxicology testing.  Physicians associated with Dr. Gallups’s ENT practice were pressured to order these medically unnecessary tests from Next Health, a lab in Texas.  As part of Oxedine’s health care fraud scheme, Next Health agreed to pay Oxendine and Dr. Gallups a kickback of 50 percent of the net profit for eligible specimens submitted by Dr. Gallups’s practice to the lab company. 

In connection with the scheme, Oxendine gave a presentation at the Ritz Carlton in Buckhead where he pressured doctors in Dr. Gallups’s practice to order the unnecessary tests. Next Health later submitted insurance claims seeking more than $2,500,000 in payments from private health insurers for the unnecessary tests. The insurance companies paid almost $700,000 to Next Health because of these fraudulent claims. Next Health then paid $260,000 in kickbacks to Oxendine and Dr. Gallups. Some patients were also charged for the tests, receiving bills of up to $18,000.

To conceal the kickback payments, Oxendine and Dr. Gallups arranged for the payments to be made from Next Health to Oxendine Insurance Services, Oxendine’s insurance consulting business. Oxendine used a portion of the kickback money to pay debts for Dr. Gallups: a $150,000 charitable contribution and $70,000 in attorney’s fees.

When a compliance officer at Dr. Gallups’s practice raised concerns about the kickbacks, Oxendine told Dr. Gallups to lie and say the payments from Oxendine to Dr. Gallups were loans. He directed Dr. Gallups to repeat the lie after he was questioned by federal agents about Next Health. And when interviewed about Next Health by the Atlanta Journal-Constitution in connection with a private lawsuit, Oxendine falsely denied working with the lab company or receiving money from the business.

This case is related to United States v. Gallups, criminal no. 1:21-cr-00370-SCJ, in which Dr. Jeffrey Gallups pleaded guilty to health care fraud.

Sentencing for John W. Oxendine, 61, of Johns Creek, Georgia, is scheduled for July 12, 2024, at 10 am before U.S. District Judge Steve C. Jones.

This case is being investigated by 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.

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