Former Georgia insurance commissioner John Oxendine pleads guilty to health care fraud
ATLANTA– A former Georgia insurance commissioner who ran for Republican governor has pleaded guilty to conspiracy to commit health care fraud.
John W. Oxendine of Johns Creek entered the guilty plea Friday in federal court in Atlanta. The 61-year-old was indicted in May 2022 on charges of conspiracy to commit health care fraud and conspiracy to commit money laundering.
The crime carries a maximum penalty of 10 years in prison, but Oxendine will likely be sentenced to less. The federal sentencing guidelines discussed in the plea agreement suggest that prosecutors will recommend that Oxendine receive a prison sentence of four years, three months and five years and three months, depending on what U.S. District Judge Steve Jones decides during a hearing on the sentencing on July 12. fine Oxendine and order him to be released under supervision.
Oxendine also agreed to pay nearly $700,000 in restitution to health insurers that lost money in the scheme, the plea document said. Prosecutors agreed to dismiss the money laundering charge as part of the plea deal.
“As a former statewide insurance commissioner, John Oxendine knew the importance of fair dealings between physicians and insurance companies,” U.S. Attorney Ryan K. Buchanan said in a statement. “But for personal gain, he willfully conspired with a physician to order hundreds of unnecessary laboratory tests at a cost of hundreds of thousands of dollars.”
Prosecutors say Oxendine conspired with Dr. Jeffrey Gallups to pressure other doctors who practiced with Gallups to order unnecessary medical tests from Next Health, a laboratory in Texas. Prosecutors said Oxendine pushed the plan in a September 2015 presentation to doctors working for Gallups’ practice.
The laboratory company, Oxendine and Gallups agreed that the company would pay Gallups a kickback of 50% of profits on the tests, according to Oxendine’s indictment. Next Health paid $260,000 in kickbacks through Oxendine’s insurance consulting firm, prosecutors said. Oxendine made a $150,000 charitable contribution and $70,000 in attorney fees on Gallups’ behalf, prosecutors said, while keeping $40,000 for himself.
Some patients were also charged and billed up to $18,000 for the tests, prosecutors said.
Prosecutors said Oxendine told Gallups to lie and say Oxendine’s payments were loans when a compliance officer at Gallups’ company asked. Oxendine told Gallups to repeat the same lie when he was questioned by federal agents, prosecutors said. And they said that during an interview by The Atlanta Journal-Constitution, Oxendine falsely said he had not worked with the lab company and had not received any money from Next Health.
Gallups pleaded guilty to one count of health care fraud in October 2021 after waiving the charges. Gallups was sentenced to three years in prison in June 2022. He was also ordered to pay $700,000 in restitution, and was fined $25,000.
In 2021, Gallups agreed to pay $3 million after a whistleblower filed a lawsuit alleging Gallups defrauded the federal government through the Next Health program and a kickback scheme at a separate medical device company. That amount was increased to nearly $5.4 million in March because Gallups and his company, Milton Hall Surgical Associates, failed to pay the original amount within a year.
Next Health has faced other fraud allegations. The company and associated people and entities were ordered in a Texas lawsuit in 2023 to pay health insurer UnitedHealth $218 million.
Oxendine was elected state insurance commissioner from 1995 to 2011. He ran for governor in 2010, but lost the Republican primary. The state ethics commission began investigating and prosecuting campaign finance cases against him in 2009, alleging that Oxendine violated state law by using campaign funds to buy a house, lease luxury cars and join a private club .
Oxendine settled that case with the Georgia Ethics Commission in 2022, agreeing to turn over the remaining $128,000 from his campaign fund without admitting wrongdoing.
He was also accused of accepting a pooled contribution of $120,000, 10 times the legal limit, from two Georgia insurance companies in 2008 when he ran for governor. A judge ruled that government officials waited too long to prosecute Oxendine on these charges.