Former Georgia GOP governor candidate pleads guilty in fraud case

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A former Georgia insurance commissioner who made a failed Republican run for governor has pleaded guilty to conspiring 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 had been indicted in May 2022 on charges of conspiracy to commit health care fraud and conspiracy to commit money laundering.

The crime is punishable by up to 10 years in prison, but Oxendine is likely to be sentenced to less. Federal sentencing guidelines discussed in the plea agreement suggest prosecutors will recommend Oxendine be imprisoned between 4 years, 3 months, and 5 years, 3 months, depending on what U.S. District Judge Steve Jones decides at a sentencing hearing set for July 12. Jones could also fine Oxendine and order him to serve supervised release.

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Oxendine also agreed to pay nearly $700,000 in restitution to health insurers who lost money in the scheme, the plea document states. Prosecutors agreed to dismiss the money laundering charge as part of the plea.

"John Oxendine, as the former statewide insurance commissioner, knew the importance of honest dealings between doctors and insurance companies," U.S. Attorney Ryan K. Buchanan said in a statement. "But for personal profit he willfully conspired with a physician to order hundreds of unnecessary lab tests, costing hundreds of thousands of dollars."

FILE - John Oxendine talks to reporters about his unsuccessful Republican bid for governor, July 20, 2010, in Atlanta. Oxendine, a former state insurance commissioner, pleaded guilty on Friday, March 22, 2024, in federal court in Atlanta to health care fraud in a kickback scheme. (AP Photo/John Amis, File)

Prosecutors say Oxendine conspired with Dr. Jeffrey Gallups to pressure other physicians who practiced with Gallups to order unnecessary medical tests from Next Health, a lab in Texas. Prosecutors said Oxendine pushed the plan in a September 2015 presentation to doctors who worked for Gallups’ practice.

The lab company, Oxendine and Gallups agreed the company would pay Gallups a kickback of 50% of the profit on the tests, Oxendine's indictment said. Next Health paid $260,000 in kickbacks through Oxendine's insurance consulting company, prosecutors said. Oxendine paid a $150,000 charitable contribution and $70,000 in attorney's fees on Gallups,' behalf, prosecutors said, keeping $40,000 for himself.

Some patients were also charged, getting bills of up to $18,000 for the tests, prosecutors said.

Prosecutors said Oxendine told Gallups to lie and say the payments from Oxendine were loans when a compliance officer at Gallups’ company asked about them. Oxendine told Gallups to repeat the same lie when questioned by federal agents, prosecutors said. And they said Oxendine falsely said he didn’t work with the lab company or get money from Next Health when interviewed by The Atlanta Journal-Constitution.

Gallups pleaded guilty in October 2021 to one count of healthcare fraud after waiving indictment. 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 saying Gallups defrauded the federal government through the Next Health scheme and a kickback scheme with a separate medical device company. That amount was raised to nearly $5.4 million in March because Gallups and his company, Milton Hall Surgical Associates, didn't pay the original amount within a year.

Next Health has faced other allegations of fraud. The company and associated people and entities were ordered to pay health insurer UnitedHealth $218 million in a Texas lawsuit in 2023.

Oxendine served as the 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 Oxendine broke 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 hand over the remaining $128,000 in his campaign fund while admitting no wrongdoing.

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He was also accused of accepting a $120,000 bundled contribution, 10 times the legal limit, from two Georgia insurance companies in 2008 when he was running for governor. A judge ruled state officials waited too long to pursue Oxendine on those charges.