10 Charged In Health Fraud Cases In Western Half Of Kentucky

Jun 29, 2018

Federal authorities in Kentucky said Thursday they uncovered schemes to divert thousands of powerful opioid painkillers and submit millions of dollars in false medical billings as part of the government's nationwide crackdown on health care fraud.

U.S. Attorney Russell M. Coleman announced indictments against 10 people — including three health care providers — in six separate Kentucky cases. Charges include unlawful dispensing of controlled substances in a state struggling with a drug overdose epidemic.

Defendants include a doctor, a psychiatrist and a chiropractor, said Coleman, the top federal prosecutor for the western half of Kentucky.

"We will not tolerate drug dealers in lab coats," said D. Christopher Evans, special agent in charge of the Drug Enforcement Administration's Louisville field division. "If you're a doctor and you're prescribing dangerous narcotics in a reckless or irresponsible manner, we're coming after you."

Cases outlined Thursday included a scheme involving a medical assistant in the doctor's office who is accused of using the physician's DEA number to issue powerful pill medicine to a patient who then diverted the prescriptions to the streets, Coleman said at a news conference. The scheme diverted 17,750 doses of hydrocodone, 2,580 doses of oxycodone and 1,895 doses of Xanax, he said.

Two other defendants are accused of operating three "false-front" medical clinics that resulted in $4.7 million in false medical billings submitted to three insurance companies and $258,000 paid in false billings, the prosecutor said. The defendants allegedly stole the identities of five physicians and numerous patients to unlawfully bill for services never rendered, Coleman said.

Another defendant is accused of running a "false-front" pharmacy in which the identities of patients and doctors were stolen to bill for prescriptions that patients never received, he said. About $858,000 was paid out in fraudulent proceeds as a result, he said.

"Health care fraud is theft and it's drug dealing," Coleman said.

Kentucky has been hit by one of the nation's highest overdose death rates, a crisis fueled by a surge of opioid-based drug abuse including prescription painkillers, heroin and fentanyl. More than 1,400 Kentuckians died from drug overdoses in 2016, a 39 percent increase in just three years.

"Our drug epidemic here in Kentucky is the challenge of our times," the state's attorney general, Andy Beshear, said at the news conference.

Charges against Dr. Chandra Reddy, a physician, and his wife, Vinodini, include conspiracy to commit health care fraud, federal authorities said. Dr. Reddy also was charged with conspiracy for unlawfully allowing nurse practitioners to use his DEA number to prescribe controlled substances, officials said.

Dr. Peter Steiner, a psychiatrist, was charged with improperly distributing controlled substances. Steiner, who operated a mental health and opioid addiction practice, prescribed medically unnecessary drugs and unlawfully distributed opiates, Coleman said. An attorney for Steiner declined to comment Thursday.

Charges against Dr. Bingston Crosby, a chiropractor, include health care fraud, money laundering and mail fraud, authorities said. Crosby is accused of paying an alleged co-conspirator to recruit patients by promising them cash or other inducements, and Crosby allegedly billed for services not rendered, they said.

An attorney representing Chandra Reddy and Crosby declined to comment Thursday.

Meanwhile, Coleman predicted that he'll have "much more to report" in the efforts to uproot health care fraud. He noted that multiple search warrants were executed recently at medical offices in Louisville, Fort Knox and Elizabethtown.

The Kentucky charges are part of a nationwide enforcement action against health care fraud involving hundreds of defendants, including doctors, nurses and other medical professionals.