One Lie After Another

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The state of a company tends to reflect its leadership from the top down. One Tennessee company isn’t in such great shape after it was discovered that the Chief Executive Officer (CEO) is a fraudster who took advantage of his own company.

John Davis owned and operated Comprehensive Pain Specialists (CPS) in Gallatin, Tennessee. He used his executive position to arrange for referrals of durable medical equipment (DME), which is covered by Medicare. These orders were sent to his co-conspirator Brenda Montgomery’s company, CCC Medical. Montgomery gave Davis monetary kickbacks for every referral CCC Medical received. (It was an “I’ll scratch your back, if you scratch mine” kind of deal.)

In an attempt to cover up his fraudulent activities, Davis registered and operated a shell company in his wife’s name called ProMed Solutions. (A shell company is a company that only exists on paper, but has a bank account where funds can be deposited.) Davis used the shell company to receive and disguise the illegal kickbacks he obtained from CCC Medical. (I can’t say involving your wife in illegal activities makes for an ideal marriage.)

At one point, Davis and Montgomery became concerned that the kickbacks payments routed to ProMed appeared suspicious on paper due to the large quantities. (They were right.) Their solution was to pretend to sell the shell company and all of its fictitious assets. (Because the best way to cover up one fraud is by committing another.) The fictional sale price of ProMed would fluctuate based on the average amount of kickbacks Davis was receiving per month. He also used CPS company funds to pay bonuses to providers who ordered DME and referred their orders to be filled by CCC Medical.

Davis received 60 percent of the profit for every referral the providers made. The referrals were for equipment his own company would have been able to provide and legitimately bill for. Instead, he handed the business over to CCC Medical so he could receive kickbacks. (Davis was more concerned with earning a personal profit than seeing his company succeed.)

It wasn’t until Davis received the last check for the “sale” of ProMed, that he began to stop referring providers to CCC Medical. Together, Davis and Montgomery pocketed over $2.9 million dollars in fraudulent reimbursements from Medicare. (They must have had really big pockets.)

Davis was convicted of one count of conspiracy to defraud the United States and violate the Anti-Kickback Statute as well as seven counts of violating the Anti-Kickback Statute. As a result, he was sentenced to 42 months in prison followed by one year of supervised release for committing Medicare fraud. Davis was also ordered to pay $770,036.00 in restitution.

Today’s Fraud of the Day comes from a Department of Justice press release, “Former CEO of Tennessee Pain Management Company Sentenced for Role in Approximately $4 Million Medicare Kickback Scheme,” on July 9, 2020.

A Tennessee healthcare executive was sentenced to 42 months in prison followed by one year of supervised release today for his role in an approximately $4 million kickback scheme.

Acting Assistant Attorney General Brian C. Rabbitt of the Justice Department’s Criminal Division, U.S. Attorney Don Cochran of the Middle District of Tennessee, Special Agent in Charge Derrick Jackson of the U.S. Department of Health and Human Services Office of Inspector General’s (HHS-OIG) Atlanta Region, Special Agent in Charge John F. Khin of the U.S. Department of Defense Criminal Investigative Service’s (DCIS) Southeast Field Office, and Director David Rausch of the Tennessee Bureau of Investigation (TBI) Medicaid Fraud Control Unit made the announcement.

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Larry Benson, Senior Director of Strategic Alliances, LexisNexis Risk Solutions - Government

Larry Benson is responsible for developing strategic partnerships and solutions for the government vertical. His expertise focuses on how government programs are defrauded by criminal groups, and the approaches necessary to prevent them from succeeding.

Mr. Benson has 30 years of experience in sales and business development. Before joining LexisNexis® Risk Solutions, he spent 12 years founding and managing two software technology startups. During the 1990s he spent 10 years as a Regional Director helping to grow a New England-based technology company from 300 employees to 7,000. He started his career with Martin Marietta Aerospace working on laser guided weapons and day/night vision systems.

A sought-after speaker and accomplished writer, Mr. Benson is the principal author of “Fraud of the Day,” a website dedicated to educating government officials about how criminals are defrauding government programs. He has co-authored WTF? Where’s the Fraud? How to Unmask and Stop Identity Fraud’s Drain on Our Government, and Data Personified, How Fraud is Changing the Meaning of Identity.

Benson holds a Bachelor of Science in Physics from Albright College, and earned two graduate degrees – a Master of Business Administration from Florida Institute of Technology, and a Master of Science in Engineering from Lehigh University.