Former insurance commissioner sentenced to prison in fraud scheme

ATLANTA — Former Georgia Insurance Commissioner John Oxendine was sentenced to 3 1/2 years in prison Friday for conspiracy to commit health care fraud in connection with unnecessary lab testing.

Oxendine, 62, pleaded guilty to the charge in federal court in March, admitting that his insurance consulting business ordered the tests from a lab company in Texas in return for hundreds of thousands of dollars in kickbacks, working with a co-conspirator, Dr. Jeffrey Gallups.

A Republican from Gwinnett County now living in Florida, Oxendine was elected insurance commissioner in 1994 and served four terms. He ran for governor in 2010 but finished fourth in the GOP primary.

“Oxendine abused his position as the Georgia insurance commissioner by undermining the integrity of the state’s health care system,” Ryan Buchanan, the U.S. Attorney for the Northern District of Georgia, said. “This case demonstrates our office’s commitment to work with our law enforcement partners to hold individuals accountable who prioritize personal greed at the expense of the public’s trust.”

According to Buchanan and the information presented in federal court, Oxendine and Gallups submitted fraudulent insurance claims for medically unnecessary tests from Next Health, a lab in Texas. Physicians associated with Gallups’ ear, nose, and throat practice were pressured to order the tests.

The lab company agreed to pay Oxendine and Gallups a kickback of 50% of the net profit for eligible specimens Gallups’ practice submitted to the company.

Next Health submitted claims seeking more than $3 million from private health insurers, which paid Next Health more than $750,000. The company then paid $260,000 in kickbacks to Oxendine and Gallups.

When a compliance officer raised questions about the kickbacks, Oxendine told Gallups to lie and say the payments were loans. Oxendine then told Gallups to repeat the lie after Gallups was questioned by federal agents.

Oxendine also was sentenced to serve three years of supervised release after he completes the prison term. In addition, he was ordered to pay more than $760,000 in restitution and a $25,000 fine.