Chiropractor Pleads Guilty to Kickback Scheme; DOJ Enters Into $9 Million Civil Consent Judgment

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The U.S. Department of Justice (DOJ) announced that on November 8, the U.S. District Court for the District of North Carolina “entered a $9 million civil consent judgment for the United States” against chiropractor Daniel McCollum. The judgement was entered under the False Claims Act.

The DOJ press release states that the “U.S. Attorney’s Office for the District of South Carolina filed an information and plea agreement in which McCollum admitted to engaging in a conspiracy to pay illegal kickbacks and to defraud healthcare programs by billing for unnecessary medical services” also on November 8. McCollum could face a maximum criminal penalty of “five years in prison and a fine of $250,000.” According to the DOJ, “[a] sentencing date has not been set.”

The DOJ states that McCollum “owned and operated pain management clinics, laboratories and a pharmacy in South Carolina,” as well as pain management clinics in North Carolina and Tennessee. His clinics “did business collectively as Pain Management Associates.”

The U.S. filed a civil complaint against McCollum in May of 2019 alleging that he “caused the submission of false claims to federal health care programs arising from kickbacks he paid for urine drug testing (UDT) referrals in violation of the Anti-Kickback Statute; referrals prohibited under the Stark Law from physicians with whom McCollum had financial relationships; and claims for UDT and other services that were not medically necessary and that lacked a legitimate medical purpose.”

On October 29, 2021, “McCollum agreed to resolve the government’s False Claims Act allegations.” In doing so, he admitted to violating “the Anti-Kickback Statute by providing kickbacks in the form of a direct bill program whereby his laboratory, Labsource, gave referring providers an opportunity to earn revenue generated from their commercially-insured UDT referrals as an inducement for those providers to refer all of their federally-insured UDT patients to Labsource.”

The press release states that McCollum “also caused medically unnecessary prescriptions for pain creams often without the knowledge or approval of the patients’ healthcare providers and regardless of whether the prescription had a legitimate medical purpose.” The chiropractor admitted that this conduct “constituted misrepresentations, fraudulent omissions and/or deceptive conduct” and also admitted that he “engaged in this conduct with an intent to deceive the United States and cause the United States to pay false or fraudulent federal healthcare program claims.”

The $9 million civil judgment resolves claims brought under the False Claims Act’s qui tam provisions. The qui tam provisions of the False Claims Act allow private individuals to sue on the behalf of the government and receive a portion of the total money recovered as a reward for the risk and damages that they assume by doing so. In this case, whistleblowers Donna Rauch, Muriel Calhoun, Brandy Knight, and Karen Mathewson all previously worked for pain management clinics that were “owned or operated by McCollum.”

“Improper financial relationships between healthcare providers and laboratories can lead to overutilization and increase the cost of healthcare services paid for by the taxpayers,” said Acting Assistant Attorney General Brian M. Boynton of the Justice Department’s Civil Division in the press release. “The provision of medical services and prescriptions should be based on a patient’s medical needs rather than the financial interests of providers.”

Medical kickback schemes can erode trust in federal healthcare systems and put patients at risk: thus, whistleblowers remain essential in rooting out fraud. The qui tam provisions of the False Claims Act work to empower whistleblowers to speak out about misconduct.

Read the DOJ press release here.

Read more False Claims Act/qui tam news on WNN.

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