Tennessee Executives Indicted For Medicare Kickback Scheme | Nashville Public Radio

Tennessee Executives Indicted For Medicare Kickback Scheme

Apr 10, 2018

Updated on Wednesday

Two health care executives have been indicted and accused of a Medicare kickback scheme. Former CEO of Brentwood-based Comprehensive Pain Specialists John Davis was arrested Monday along with Brenda Montgomery, founder of a company based in Camden called CCC Medical.

Federal authorities allege that Davis was referring pain patients from around the country to Montgomery's medical equipment firm. In exchange, prosecutors say her company kicked back 60 percent of the $2.6 million in Medicare money it brought in over several years.

"We will be unrelenting in our efforts to bring to justice, those individuals and corporations who choose to profit at the expense of the health of those individuals with the greatest need," Acting Assistant Attorney General John Cronan said in a statement.

Davis entered a plea of not guilty on Monday and was released without bond, according to his attorney, Lisa Rivera of Bass Berry & Sims. She also issued a brief statement:

"We are confident that when the jury hears all of the facts, he will be acquitted."

Comprehensive Pain Specialists was already under scrutiny from federal authorities for its drug testing business. Kaiser Health News found that 80 percent of the billings to Medicare by CPS were for its in-house drug testing lab, raising a "red flag" for regulators.

State Sen. Steve Dickerson, R-Nashville, is an anesthesiologist employed by CPS, which was founded in 2005 primarily serving Nashville and has expanded to neighboring states. In 2016, the company laid off 82 staffers in Gallatin, according to a filing with state labor regulators. CPS told Fox 17 that the layoffs were part of a restructuring, not a downsizing.

The scheme as explained by the U.S. Attorney's office:

The indictment alleges that from at least June 2011 until at least June 2017, Montgomery agreed to pay Davis, the CEO of CPS, illegal kickbacks in exchange for Medicare referrals for DME ordered by CPS employees that Davis referred to CCC Medical.  As alleged in the indictment, Montgomery agreed to pay Davis 60 percent of Medicare proceeds collected on claims billed for DME ordered by CPS providers and referred by Davis.  In addition, the indictment alleges that Davis and Montgomery took a number of steps to conceal their illegal agreement, including making kickback payments through a nominee, creating and filing false tax documents, and, for Davis, intervening as CEO to prevent the owners of CPS from obtaining their own Medicare DME supplier numbers that would have allowed CPS to bill for its own Medicare DME orders.

Beginning in or around May 2015, according to the indictment, Davis and Montgomery renegotiated their illegal agreement to further obscure their personal contract from Medicare and from CPS owners and employees.  The indictment alleges that from approximately May 2015 until approximately November 2015, Montgomery agreed to pay Davis $200,000 for the sham purchase of a shell entity known as ProMed Solutions LLC (ProMed).  Davis and Montgomery renegotiated the sham transaction after Montgomery complained that her referrals from CPS had been lower than expected, and Montgomery ultimately paid $150,000 for the shell, ProMed, according to allegations in the indictment.  The true purpose of this payment was to induce Davis to continue driving CPS referrals to CCC Medical, the indictment alleges.