A federal jury in Nashville found the former CEO of a closed Tennessee pain management company guilty for his alleged role in a $4 million Medicare claim kickback scheme, U.S. Attorney Don Cochran for the Middle District of Tennessee said in a press release.
John Davis, 41, of Franklin, the former CEO of Comprehensive Pain Specialists (CPS) of Gallatin, was convicted of all counts including one count of conspiracy to defraud the United States and violate the Anti-Kickback Statute, and seven counts of violating the Anti-Kickback Statute, Cochran said. The scheme involved approximately $4 million in tainted durable medical equipment (DME) claims to Medicare.
Meanwhile, Davis’ sentencing will be scheduled for later this year before U.S. District Judge William L. Campbell Jr., who presided over the trial, Cochran said.
According to evidence presented at trial, Davis abused his position as CEO to arrange for referrals of Medicare DME orders to his co-conspirator Brenda Montgomery and her company, CCC Medical, in Camden, Cochran said. Evidence showed that Davis operated a shell company called ProMed Solutions (ProMed), which he had registered in the name of his wife. Despite having no involvement with ProMed and performing no work, Davis’ wife and ProMed received more than $770,000 in illegal kickbacks, Cochran said.
Montgomery pleaded guilty in January to one count of conspiracy to defraud the United States and violate the Anti-Kickback Statute, and seven counts of violating the Anti-Kickback Statute. She is scheduled to be sentenced on May 3.
Davis and Montgomery pocketed over $2.4 million dollars in improper reimbursement from Medicare, Cochran said. Davis used company funds from CPS to pay bonuses to CPS providers who ordered DME for Medicare beneficiaries and referred those orders to CCC Medical. Davis would receive 60 percent of the Medicare profit from those referrals, while the company he ran footed the bill, Cochran said.
Evidence also showed that in April and May of 2015, concerned about the size of the kickback payments CCC Medical was making to Davis, he and Montgomery concocted the sham sale of ProMed, Cochran said. ProMed had no assets, no employees, no equipment, no office space, and no customers other than CPS. Evidence further showed that Davis and Montgomery set the price for the sham sale based upon the average monthly kickbacks that Davis had been paid for the previous eight months. When CPS referrals slowed, Davis agreed to reduce the purported “purchase price” from $200,000 to $150,000. Once Davis had received the last check for the sham sale, he went about cutting off referrals to CCC Medical, Cochran said.
State Sen. Steve Dickerson (R-Nashville), a physician, was a founder and co-owner of the company, beginning in 2005, Nashville Public Radio said in September 2018. He was still affiliated with the company when he was first elected to the State Senate in 2012.
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Jason M. Reynolds has more than 20 years’ experience as a journalist at outlets of all sizes.