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CLERK'
S OFFICE U.
S.DIST. COURT
ATM INGDO
N,VA
FILED
SEF 23 221j
IN TH E U N ITE D STAT ES D ISTR ICT C O U R T
FO R TH E W E STER N D ISTR ICT O F VIR G IN IA
A BIN G D O N D IV ISIO N
UNITED STATES OF AM ERICA )
)
v.
)
)
BETH PA LIN
JO SEPH D .W EBB
and
M A R Y E LIZA BETH CU RTISS
JULI
A C, UD
6Y:
D U
:
LERK
,
K
caseNo. l.
'IM
violations: 18U.S.C.lj2,1347,1349
42 U.S.C.% 1320a-7b(b)(2)(A),and
1320a-7b(b)(1)(A)
IN D IC TM EN T
INTRODUCTION
THE GR AN D JU RY CH A RG ES THA T:
Atalltim esrelevantto thisindictm ent,M edicare,Virginia M edicaid,and Termcarewere
health care benefitprogram s funded and adm inistered by the United States Governm ent.
health care benefitprogrnm is defined in Title 18,United States Code,Section 24(b)asany
publicorprivateplan orcontract,affecting comm erce,underwhich any m edicalbenefit,item,or
service is provided to any individual,and includes any individualor entity who is providing a
m edicalbenefit,item or service for which payment may be m ade under the plan or contract.
M edicare,Virginia M edicaid,and Telmcare provided health care benefitsto eligible recipients,
includingpaym entforlaboratory services,such astlrine drug screens,and forprescription drugs.
The M edicare program w asestablished to provide m edicalservices to elderly,blind,and
disabled beneticiariesptlrsuantto the provisionsofthe SocialSecurity Act(Title 42,United
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StatesCode,Section 301etseq.). M edicareisadministered bytheFederalgovernmentthrough
theCentersforM edicareand M edicaid Services(CM S)and isfunded through aportion ofthe
payrolltaxes paid by workersand employers;and,by premiums deducted from monthly social
security checks.
M edicare will only pay for treatm ents and services, such as laboratory tests and
prescription drugs, which are considered medically necessary, performed within accepted
m edicalstandards,and arerendered foralegitimatemedicalpurpose.
4.
M edicareservicesaredividedinto distinctparts. M edicarePartB (outpatientinsurance)
includes benefits for doctor and other non-hospital health care provider services, such as
laboratory services and urine drug screens. M edicare PM D is a prescription drug benetit.
M edicare will only pay for treatments and services which are considered reasonable and
m edically necessary,performed within accepted m edical standards, and are rendered for a
legitimatem edicalpum ose.
5.
A11providers enter into a M edicare provider enrollm entagreement,which outlines the
nllesand regulationsthatareto be followed to ensure thatlim ited M edicare ftmds areexpended
appropriately. Upon CM S certification oftheproviderenrollmentagreem ent,a providernum ber
isissued. BristolLaboratoriesbecam e a M edicare provideron or aboutJanuary 1,2009 and w as
assignedtheNationalProviderIndex @ PI)ntlmber#1447410642.
M edicare providers electronically subm it billings for medicaltreatments and services
rendered to recipients via a health insurance claim form (ç1CM S-1500'') to the M edicare
Administrative Contractoror ICM AC''. The M AC isa regionalprivate company thatcontracts
w ith CM S to adm inisterM edicare benefits. The M A C review sand processes the claim ,and then
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generatesan electronicfundstrmzsferto theprovider'sdesignated bank account. TheM AC that
serviced Virginia from M ay 2009 through M arch 18,2011 wasTrailblazerHea1th Entem rises,
LLC,headquartered in Dallas,Texas. The M AC thatreplaced Trailblazer in M arch 19,2011
through A pril30,2012 isPalm etto GBA ,headquartered in Colum bia,South Carolina.
42 Code of Federal Regulations Section 410.32 states that alldiagnostic x-ray and
laboratory tests,and otherdiagnostic testsbilled to M edicare m ustbe ordered by the physician
who istreating the beneficiary. Thatis,the physician who furnishesa consultation ortreats a
beneficiary for a specific m edical problem and who uses the results in the m anagem eét of the
benetk iary's specific medicalproblem . Tests notordered by the physician who istreating the
beneficiaryarenotreasonableand necessary.
8.
Chapter 1,Section 30.1.3 ofthe M edicare Claim sProcessing M anual-GeneralBilling
Requirem ents states that a provider cnnnot impose any limitations with respect to care and
treatm ent of M edicare beneficiaries that it does not im pose on all other persons seeking
treatment. A providermay notrefuseto furnish atreatm entforcertain illnessesorconditionsto
M edicare beneficimies,ifitfurnishessuch treatm entto others.Failure to abide by thisrule isa
causefortermination oftheprovider'sagreem entto participate in the M edicareprogram .
9.
Virginia M edicaid isahealth carebenefitprogram thatwasestablished by Title 19 ofthe
SocialSecurity Actof 1965 designed to providem edicalassistance servicesto indigentpersons.
The U.S.Departmentof Health and Human Services (1çHHS'') and the Commonwea1th of
Virginia,DepartmentofM edicalAssistance Services(ItDM AS'')administerand supervise the
M edicaid program in Virginia, which is called the Virginia M edical Assistance Progrnm
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(1ûVMAP'').lnVirginia,Medicaid isfundedbybothfederaland statedollarsatapproximately a
50% -50% ratio dtlring the years2009-2011.
10.
DM AS has established procedures in accordance with the regulations of HHS to
com pensate doctors, laboratories and other health care providers for services provided to
M edicaid recipients. A participating provider is a person,organization,or institution with a
valid participation agreementwho orwhich will(1)provide the service,(2)submitthe claim,
and,(3)acceptas paymentin fullthe amountpaid by VM AP. One ofthe yvays aprovider
receivesreimbursem entforM edicaid services is to submit,by m ailorwire,a Health lnsurance
Claim Form CICM S 150053totheM edicaidfiscalintermediary. Thefiscalintennediary,under
contractwith DM AS,receives,processes,and authorizespaymentto providersofservicesunder
the M edicaid program First Hea1th Services Corporation,of Richm ond,Virginia,w as the fiscal
intennediarytmtilJuly2010. Xerox(originallyACS StateHealth,whichwasboughtbyXerox)
wasthe fiscalintermediary afterJuly 2010.
Providers sign M edicaid participation agreem ents thatrequire them to keep such records
asare necessm'y to fully disclosethe selwicesprovided to M edicaid patients,and to fum ish such
inform ation,upon request,to the M edicaid progrnm. Providers agree to render and perfonn
services thatare in accordance with federaland state law,aswellas allVM AP adm inistrative
policiesand procedures.
M edicaidwillonlypay forservicesanditems(such aslaboratory testsandprescription
medications) which are considered medically necessary,performed within accepted medical
standards,and arerendered foralegitim atemedicalpurpose.
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Virginia Administrative Code j12 VAC 30-80-30 covers M edicaid fee-for-senice
paym ents and states that providers are prohibited from chargipg M edicaid-insured patients a
higherfee-for-service than they would charge a non-M edicaid,tminsured patient. Section A
states:I'Paymentforthefollowing services,exceptforphysician services,shallbe thelowerof
thestateagencyfeeSchedule oractualcharge (chargeto thegeneralpublic).'' Section A (8)
specificallyaddresseslaboratory services(otherthaninpatienthospitals).
14.
The Termcareprogrnm wasimplemented asafive-yeardemonstration progrnm approved
by the federalHea1th Care Financing Administration (11HCFA''),which isnow known asthe
CentersforMedicareand MedicaidServices(ûtCM S'').Theprogram received severalextensions
after the originalexpiration date of December 30, 1999 and is in place today. Tenncare is
considered a health carebenefitprogram asestablished by Title 19 ofthe SocialSecurity Actof
1965. Tenncare isftmded by both federaland statedollars. The Federalportion ofTermcare's
costswas64.3% in 2009;65.57% in 2010;and,65.8% in 2011.
Tenncare essentially replaced and enhanced the M edicaid program in Termessee by
offering coverage to som e tm insured and tm insurable persons w ho w ere not eligible for
traditional M edicaid. Tenncare services are offered through several m anaged care entities.
Each enrollee has a M anaged Care Organization CçM CO'') for his primary care and
medical/surgicalservices.
16.
Healthcare providers subm ita tCCM S 150055form to the proper Term care M anaged Care
Contractor (ççM CC'') forpayment of services perfonned by the provider. Providerbilling
subm issions and subsequent Term care paym ents to the providers can either be in paper or
electronic fonnat.
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Providerscompleteabinding providerenrollm entagreem ent,which statesthey willabide
by Tenncare standards, rules,and regulations. Tenncare w illonly pay for services and item s
(such as laboratory tests and prescri
ption medications) which are considered medically
necessary, perfonned within accepted m edical standards, and are rendered for a legitimate
m edicalpurpose. ln Section F ofthe Tenncare providerenrollm entagreement,providersagree
Goto make Covered Services available to (Termcare)M embers in the same manner thatsuch
servicesareprovided ormade to a11otherpatients of Supplier;''and (énotto dterentiate or
discriminatein thetreatmentof TenncareMemberson thebasisofrace,color,veteran status,
sex,age,religion,nationalorigin,handicap,disability,stateofhealth,orsourceofpayment.''
18.
Ata11tim esrelevantto thisindictment,Anthem BlueCrossBlue Shield ofVirginiabased
in Richm ond,Virginia;Blue CrossBlue Shield ofTermessee based in Chattanooga,Tennessee;
C IG NA Insurance based in H artford,Connecticut;and,A ETNA insurance based in H artford,
Connecticut(collectivelytheççprivateinsurancecompanies''),werehealthcarebenefitprogrnms.
A health carebenefitprogram isdefined in Title 18,United StatesCode,Section 24(b)asany
publicorprivateplan orcontract,affecting comm erce,underwhich any m edicalbenefit,item ,or
service isprovided to any individual,and includes any individualor entity who isproviding a
m edicalbeneft,item or service for which paym ent may be m ade under the plan or contract.
Anthem Blue CrossBlue Shield (ofVirginia),Blue CrossBlue Shield ofTennessee,CIGNA
lnsurance,and AETNA insurance (çlthe private insurance companies'') provided health care
benefits to eligible recipients, including paym ent for laboratory services, such as urine drug
screens,and forprescription drugs.
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Each ofthe private insurance companies,aswith M edicare and M edicaid,have provider
agreements in which they only will pay for treatments and services which are considered
reasonable and m edically necessary, perfonned within accepted medical standards, and are
rendered fora legitim ate medicalpurpose.
20.
A t a11 tim es relevant to this indictm ent,BristolLaboratories, LLC ,w as a participating
provider for M edicare,Virginia M edicaid,and Tenncare, as well as for each of the private
insurance companies. Provider participation in a11 of these health care benefit programs is
voluntary.
Subutex (buprenorphinehydrochloride)andSuboxone(buprenomhinehydrochlorideand
naloxonehydrochloride)wereapproved by theU.S.Food and DrugAdministration (:TDA'')in
2002 for the treatm ent of opiate/opioid dependence.
Subutex and Suboxone treat opiate
addiction in patients by preventing the sym ptom s of w ithdraw al from heroin,oxycodone,and
otheropiates/opioids.
Subutex contains only buprenop hine hydrochloride and is intended for use at the
beginning oftreatmentfordrug abuse(also called çfinduction''). Suboxoneisacombination of
two proven medications,buprenop hine and naloxone. Naloxone is added to buprenorphine to
decrease the likelihood of diversion and abuse of the combination product. Both drugs are
supplied in 2 m g and 8 mg tablets,aswellas sublingualfilm sheets. Subutex isalso indicated
when apatientcannottake Suboxone dueto pregnancy ordocum ented allergy tonaloxone.
23.
Due to itsopioid agonisteffects,buprenorphine can be abused,particularly by those not
physically dependenton opioids. Based on the potentialforabuse ofSubutex and Suboxone,the
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FDA and itsparentDepartmentofHealth andHuman Services(1çHHS'')recommendedthatthe
Dnzg Enforcement Administration (ûçDEA'') place the active ingredient, buprenomhine, in
Schedule IlIunderthe Controlled SubstancesAct(ççCSA''). The DEA has,in fact,classifed
buprenorphineasa Schedule l11controlled substance.
24.
Suboxone, Subutex and buprenop hine diversion and abuse have becom e com m on in
Southwest Virginia and N ortheast Tennessee. W arrants and indictm ents for their diversion
and/or illegaldistribution are frequent in many jurisdictions,including W ashington County,
Virginia'
,Bristol,Virginia;Scot'tCounty,Virginia;and,Sullivan County,Telm essee.
25.
ln orderto prescribe Suboxone,Subutex,and buprenorphine in an office based setting for
treatment of dl'
ug addiction, a physician must com plete additional training and apply for a
separate DEA number called an 1ûX ntlm ber.'' The X num ber is the snm e as the physician's
regularDEA numberwith an X in frontofit. Thistraining iseighthoursand can be completed
on-line.
26.
An X num ber allows a physician to treat 30 patients with Suboxone, Subutex and
buprenom hine forthe firstyear. The physician can apply to the DEA to treatup to 100 patients
afterthe firstyear.
27. Dr.CKW ,M D (tICKW '')wasan anesthesiologistwhoobtainedhisX numberand began
prescribing Suboxone,Subutex and buprenorphine in iO09,and initially worked ata Jolmson
City,Termessee facility. ln approxim ately July or August of 2009,he leftthat facility and
opened his own practice in Bristol,Virginia,where he continued to prescribe Suboxone and
Subutex and buprenom hine. That practice,CK W ,M .D .,PLLC ,w as originally located at 1009
W est State Street, Suite 2-C,Bristol,V irginia. From January 2011 until its closure in A pril
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2012,the practice waslocated at337 BluffCity Highway,Unit101,Bristol,Tennessee. CKW
died on M arch 14,2013,a little lessthan oneyearafterheclosed thisoftice.
28. BristolLaboratories,LLC,CiBristolLabs'')located at1009 W estStateStreet,Suite2B,
Bristol,Virginia,isa medicallaboratory owned by BETH PALIN (tTALlN''),who isa non-
practicingattorneylicensedinSouthCarolina.Palin'shusband,JOSEPH D.W EBB (%çW EBB''),
although notan owneraccordingto corporate filings,isheavily involved in running thebusiness.
W EBB handles the marketing partofthe business and is also involved with hiring and firing
em ployees.
M tn.Empire Medical Care, lnc., LLC (CIM EM C'')#was a business incorporated in
Virginia and in Telm essee and owned by PALIN . M EM C was located at 138 Antique Street,
Gate City,Virginia.Dr.MARY ELIZABETH CURTISS CûCURTISS''),an otolaryngologist
tear,nose and throatdoctor) who has a practice in M arion,Virginia,was an employee of
M EM C. CURTISS,like CKW ,hasan X ntlmberthatallowsherto prescribe Suboxone,Subutex
and buprenom hine. In fact,CURTISS wasem ployed by CKW fora shorttim e in 2010 before
shebecam eemployed by M EM C.
30.
Both CKW and CURTISS purportedto be operating substanceabusetreatm entprogrmns,
prescribing Suboxone, Subutex and buprenomhine for the treatment of opiate addiction.
CU RTISS ultim ately had an X num ber allow ing her to treat up to 100 patients. CK W 'S X
num beronly perm itted him to see up to 30 patients.
31.
Both CKW and CURTISS operated on a cash only basis and did notacceptM edicare,
M edicaid orinsurance ofany kind foroffice visits. Patientspaid asm uch as $250 foran initial
visitand up to $110 foreach subsequentweeklyvisit.
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CKW and CURTISS both filled outand sentin pre-authorization form s so thatinsured
patientscould have their prescriptions covered by theirplans.
33.
Both CKW and CURTISS required every patientto undergo a urine drug screen atevery
weekly appointm ent. Both doctorsreferred alloftheirurinedrug screensto BristolLabs.
Unlike M EM C and CKW 'S oftk e, Bristol Labs did accept insurance, M edicare and
M edicaid. Both M EM C and CKW would collectpatients'inslzranceinformation so BristolLabs
could billinsurance forany testing done.
BristolLabs,CKW ,and M EM C treated insured patients with two different expensive
automated drug screens:a qualitativetestthatmeastlresthe presence orabsence ofa drug orits
m etabolites,followedby aquantitativetestthatmeasureshow much ofadrugoritsmetabolite is
present in the urine. Uninsured patients were treated using one much cheaper,dip-stick type
drug screen called a çlquick cup.''
W hen apatientwasinsured,BristolLabswould do qualitative testing in-house,and then
send the specim en outto anotherlab,CtFL'' in D enver,Colorado,forquantitative testing.
37.
M edicare,M edicaid and the insurance companies would be billed up to $2,000.00 per
urine drug screen for the in-house qualitative testing. M edicare would pay up to $321.76;
Virginia M edicaid would pay up tci$118.53;Tenncarewould pay up to $256.72;and,insurance
companiespaidup to $1218.75 forthe in-housequalitative testing by BristolLabs.
38.
M edicare,M edicaid and the private instlrance companieswould be billed an average of
$1,125.00 perurine drug screen forthe additionalquantitative testing by FL. M edicare would
pay up to $321.76;Virginia M edicaid would pay up to $112.59;Tenncare would pay up to
$209.74;and,insurancecom paniespaid up to $582.35 forthequantitativetesting.
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39.
Patients withoutinsurmwe,M edicare or M edicaid would not getany automated lzrine
drug screen testing. Uninsured patients would have a ltpointof care''orûtquick cup''test,for
which they were charged between $10 and $25.
40.
lnsured patients were not given the option of taking the cheaper quick cup test,and
uninsured patientsw ere notgiven the option oftaking the m ore expensive autom ated tests.
41.
The type ofurine drug screen ordered depended only on method ofpaym ent and had
nothing to do with the particularsofeach patient'sindividualtreatm ent.
42.
A t M EM C, CUR TISS insisted that every patient have an instant,point of care t%quick
cup''urine drug screen. Patientswith M edicare,M edicaid or insurmwe would have additional
autom ated qualitative testing and autom ated quantitative testing,w hile uninsured patientshad no
furthertesting.Uninsured patientspaid an extra $25'
cash forthe quick cup test. lnsuredpatients
paid nothing extra,and theirinstlrancewasbilled forthetwo autom ated tests- they paid nothing
outofpocketforthe 1ab testing.
43.
For an insured patient,the govenzm entorprivate insurance com panies were billed 125
tim esas m uch as the cash patient,and they paid 25 tim es as m uch as a cash patient,for w eekly
drug screening.
D R .CK W .M D
44.
From approxim ately August2009 tllrough D ecem ber 2010,CK W 'S office was located in
the snm ebuildingasBristolLabs. Patientscould easily registerwith thedoctor,go to thelab for
amine drug screen,and return to the doctor'softsce. Stafffrom both businesseswentback and
forth freely between CKW 'Softice and the lab.
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45.
CKW m oved hispractice to Bristol,Tennessee in Januazy 2011,and rem ained there until
its closure in April2012. Since the lab was no longerphysically close by,BristolLabs placed a
çûcollector''at CKW 'S office every day it was open. The collector would collect instlrance
information orcash foruninsured patients,and the urine specimen from each CKW patient,and
bring them back to the 1ab for processing and analysis. The collector w as an em ployee of,and
w aspaid by,BristolLabs.
46.
W hen apatienttested positive forsom ething they should nothave been taking,ortested
negative forSuboxone oranotherdrug thatthey should be taking,CKW seldom took action or
inaposed consequences. Occasionally,treatm entnotes stated thata patientwas ççcounseled''or
the testwould be noted in the file. Rarely was apatientdism issed,even forrepeated bad drug
screens. Patients were neverrequired to attend counseling orN arcotics Anonymousm eetings
when they had bad drug screens. ln fact,no patientswere everrequired to go to counseling or
m eetings ofany kind for any reason.
A patient's initialvisitconsisted ofa cursory interview and no physicalexam ortesting
otherthan the urine drug screen,and the patientpaid $250 cash forthatvisit. Patientsdid see
CKW during an initialvisit.
48.
CKW did not getrecords from patients'other medicalproviders and relied sim ply on
whatpatientstold him in termsofmedicalhistory andphysicalcondition.
49.
Subsequentvisits were required weekly,and patients had to have a urine drug screen
each time. The patientdid notalwayssee CKW during the subsequentvisits,which cost$110,
often having theirdrug screen and getting a prescription from the office staff.
(U
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Subutex,should only beused forpatientswho have a documented allergy to naloxone,or
forpatientswho arepregnant,orduring induction. Subutex hasahigherstreetvalueand ism ore
proneto abuseand diversion than Suboxone.
CKW prescribed Subutex orgeneric buprenorphine to many patientswho did nothavea
docum ented allergy to naloxone and w ho were notpregnant.
52. Suboxone,Subutex and buprenorphineare centralnervoussystem (tçCNS'')depressants,
and com bining those dnlgs with otherCN S depressants,such asalcoholorbenzodiazepinescan
be very dangerousand cause respiratory failure. CKW often prescribed benzodiazepines along
w ith Suboxone,Subutex orbuprenorphine.
53.
lnduction is the process a patient should go through on his orherfirstvisitto a Suboxone
clinic. Induction occurs w hen the patient presents for the first treatm ent appointm ent in
moderatewithdrawal. Thedoctoradministersadose,monitorsthepatient,andadjuststhe dose
asneeded.
54.
CKW did notperform any inductions athispractice. Aftera cursory firstappointm ent,
typically lasting less than fifteen minutes, a patient was given a prescription to fill at the
pharm acy. Otherthan the urine drug screen,no otherm edicaltests orexam s occurred.
M CRW was hired by CKW to be his office manager. She was employed by another
office-based addiction treatm ent physician in Kingsport, Tennessee,prior to being hired by
CK W .
56.
O nce hired, M CRW took a very active role in determ ining how the practice w ould
operate. M CRW w as involved w ith nearly every significant decision concerning CK W 'S
practice.
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Although no counseling ormeetingsoccurred,M CRW held herselfoutto bea counselor
and group leader/facilitatorforNarcoticsAnonymous-type m eetings,thereby giving the illusion
that legitim ate counseling and m eetings w ere being offered atCK W 'S practice. Thispartofthe
practice wascalledççBristolRecovery.''Counseling and/orm eetingswerenotrequired to rem ain
a patientofCK W 's.
58.
CKW and M CRW began to have a rom antic relationship,and M CRW becam e pregnant
w ith CK W 'Schild,born in approxim ately Decem ber2010.
59.
Dtlring thesumm erof2010,CKW and M CRW m oved to Louisiana,butkepthispractice
open in Bristol,Tennessee,despite living a driving distance of over tw elve hours and 800 m iles
aW ay.
60.
W hen he moved to Louisiana,CKW would come up to his office in Bristol,Tennessee,
once ortwice a month,yethisoffice wasopen two daysa week,every week. Thereweretimes
thatfive weeks went by without CKW appearing at his practice or seeing his patients. His
patients,however,continued topay forappointments,have drug screens,and receive pre-written
prescriptionsinhisabsence from CKW 'Snon-medically trained staff.
61.
During December 2010, CKW 'S oftice was closed for one week over the holidays.
Patientswererequired to pay double ($220)attheirappointmentpriorto the holiday week in
orderto receive an extra week'sprescription. Patients weretold ifthey only broughtthe usual
officevisitfee($110),theywouldoplyreceiveoneweek'sprescriptionandtheywouldçlfeellike
crap''overthe holidays.
62.
CK W lefthisnew office m anager,JP,in charge ofhispractice w hen he w as notthere. JP
had no m edicaltraining. JP w as hired initially to be a housekeeper for CK W and M CRW . JP
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wasassibted by hersister,HB,who had a high schooldiplom a and had taken some clmssesata
comm unity collegebutwho hadno medicaltraining either.
The atm osphere at CKW 'S office was unlike m ost doctors'offices: sm oking in the
waiting room was som etim espermitted;CKW broughthisdog with him to the office attim es;
therewereno stethoscopes,thermometersorotherkindsofmedicalequipment(otherthanurine
screen cups); and, some patients seemed impaired by alcohol and drugs while there for
appointm ents.
CKW wrote prescriptions for Suboxone,Subutex,buprenom hine,and berlzodiazepines,
not for legitim ate medicalpum oses and outside the usual cotlrse of a professional m edical
practice.
65.
CK W ordered excessive,m edically unnecessary quantitative and qualitative urine dnzg
screens from BristolLabs,and failed to use the results ofthese tests to guide treatmentofhis
patients.
66.
CK W treated cash patients differently than insured patients by giving them different
laboratory testsbased only on theirm ethod ofpayment,and forreasonsthathad nothing to do
with theirtreatm ent.lnsurancepatientswere notgiven the choiceofhaving aquick cup test,and
cash patientsw ere notgiven the choice ofautom ated testing.
M TN .EM PIR E M ED IC AL C AR E.LLC - DR .M AR Y ELIZA BETH CU RTISS
In October 2010, PALIN and W EBB attempted to open an oftke-based addiction
treatm entclinic in Bristol,Virginia,which they called ççM edpath.'' This business was closed
shortly afteritopened due to their failure to getan appropriate business license.
'
'.((
(
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68. Theclinicre-opened asMtn.EmpireMedicalCare,LLC CIM EM C'')in December2010,
atanew location in GateCity,V irginia.
69.
M EM C'Sprimary physician wasCURTISS,whom PALIN and W EBB had metwhile she
workedwithCKW forabout3monthsduringthesummerof2010 UustbeforeCKW movedto
Louisiana). CURTISS wasan independentcontractorand waspaid $1400 perday to work at
M EM C,regardlessofthenumberofpatientsshesaw ortheam otmtofwork shedid.
70.
CURTISS'salary exceeded fair marketvalue for the work she pedbrmed. Her salary
was excessive for the time she spentand the work she did,and was notviable comm ercially.
The only reason M EM C could afford to pay herthatjalary wasthe large income generated by
1ab testing sheordered thatwascompleted and billedby BristolLabs.
71.
CU RTISS referred every patient she saw at M EM C to Bristol Labs for urine drug
screening.
72.
For mostofthe tim e thatM EM C wasopen,there wasno counselorworking there. ln
approxim ately Jtm e 2011,M L w as hired to be a counselor there. C OO SCling or ççgroup''w as
nevera requirem entto rem ain a patientatM EM C .
73.
Although CURTISS did spend m ore tim e with herpatients than CKW ,she did notdo
inductionsofnew patientseither. Shejustgavethem aprescription to fillatthepharmacy at
theirtirstappointm ent.
74.
CURTISS waspaid by M EM C,however,sheorherhusband wouldpick up herpaycheck
atBristolLabs.
75.
There w asalways a BristolLabs em ployee working atM EM C. Thisperson w ould actas
receptionist, office m anager, and urine drug screen snm ple collector at M EM C. That person
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would also be involved with marketing M EM C by putting up yard signsin SouthwestVirginia
and NortheastTennessee.
76.
PALIN and W EBB decided that they wanted to hire additionalphysicians to work at
M EM C,asCU RTISS w asonly w orking one ortw o days perw eek.
77.
A m anagem ent consulting firm introduced them to another physician who had his X
num berfrom DEA and wasable to prescribe Suboxone,Subutex and buprenorphine. He began
w orking there during the sum m erof2011 and only saw fourpatients.
The same management consulting firm introduced W EBB and PALIN to two other
physicianswho were interested in obtaining theirX numbersand working forM EM C. Both of
those doctorstook an on-line course atBristolLabsto gettheirX num ber,and the course was
paid forby BiistolLabs. M EM C closedbeforethesedoctorsofficially began employm ent.
Although they signed the ordersauthorizing the screenings,the physiciansatM EM C did
not choose the type of urine drug screens thatwould be done. BristolLabs created the drug
screen order forms which the doctors pre-signed. The M EM C oftice m anager,also a Bristol
Labsem ployee,would check offthe teststo be perform ed depending on whetherthepatienthad
insurance or not: autom ated qualitative and quantitative testing forinsured patients,orquick cup
fornon-insured patients.
80.
PALIN and W EBB required the physiciansthey em ployed atM EM C,and in particular
CU RTISS, to order excessive, m edically unnecessaty quantitative and qualitative urine drug
screens from BristolLabs,and the physicians did not use the results ofthose tests to guide
treatm entofM EM C 'Spatients.
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AtPALIN and W EBB'Sinstruction,M EM C treated cash patientsdifferently than insured
patientsby giving them differentlaboratory testsbased only on theirm ethod ofpayment,and for
reasonshaving nothing to do with theirtreatm ent.lnsurance patientswere notgiven the choice
ofhaving a quick cup test,and cash patients were notgiven the choice ofautomated testing.
CO UN T O N E
The Grand Jury chargesthat:
1. The lntroduction is re-alleged and incorporated by reference into this count ofthe
indictm ent.
O n or aboutand betw een M ay 1,2009 and April30,2012,in the W estern Districtof
V irginia and elsew here, CK W , M CRW , BETH PA LIN , JO SEPH D . W EBB, and M A R Y
ELIZABETH CURTISS,asprincipalsand aidersand abettors,knowingly and willfully executed
and attempted to execute a scheme and artifice to (a)defraud any health care benefitprogram
and (b)obtain bymeansoffalseand fraudulentpretenses,representations,and promises,money
under the custody or control of Virginia M edicaid, Tenncare, M edicare, and the private
insurance com panies,which are health care benefitprogrnms as defined by Title 18,United
States Code 124(b),in connection with the delivery ofand paymentforhealth care benefits,
item sand services.
3. ltwasthe objectofthe schemeand artifice to defraud thatCKW ,MCRW ,BETH
PA LIN, JO SEPH D . W EBB, and M A RY ELIZA BETH CU RTISS w ould gain com pensation
from Virginia M edicaid,Tenncare,M edicare,and the private insurance companies,to which
they were notentitled,by fraudulently ordering,completing,and billing forurine drug screens
that were m edically unnecessary,and the results of which w ere notused in directing the care of
.
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thepatient.
4.ln furtherance ofthe scheme and artitice to defraud,CKW ,M CRW ,BETH PALm ,
JOSEPH D. W EBB, and M ARY ELIZABETH CURTISS knowingly subm itted and caused
billing in the amountof$12,459,211to be subm itted to VirginiaM edicaid,Tenncare,M edicare,
and the private insurance companies, and received over $1,203,000 to whieh they were not
entitled.
In fulherance of the schenae and artifice to defraud,both CKW and M ARY
ELIZABETH CURTISS m ade a urine dnzg screen by BristolLaboratories,LLC,aprecondition
for obtaining a weekly Suboxone, Subutex or generic buprenorphine prescription for opiate
addicted patients.
6.
A11in violation ofTitle 18,United StatesCode,Sections2 and 1347.
C O U NT TW O
TheGrand Jury chargesthat:
The lntroduction is re-alleged and incorporated by reference into this count of the
indictment.
2. On oraboutand between M ay 1,2009 and April30,2012,in the W estern Districtof
Virginia and elsewhere, CKW , M CRW , BETH PALIN, JOSEPH D. W EBB, and M ARY
ELIZABETH CURTISS conspired to knowingly and willfully execute and attemptto execute a
schemeandartiticeto (a)defraudahealth carebenetk program and(b)obtain bymeansoffalse
and fraudulentpretenses,representations,and prom ises,money underthe custody and controlof
V irginia M edicaid,Tenncare,M edicare,and the private insurance com panies,which are health
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carebenefitprogrmnsasdefned by Title 18,United StatesCode Section 24(b),in connection
with thedelivery ofand paymentforhealth care benefits,itemsand services,in violation ofTitle
18,UnitedStatesCode,5 1347.
3. ltwastheobjectofthe conspiracy thatCKW ,M CRW ,BETH PALW ,JOSEPH D.
W EBB,and M ARY ELIZABETH CURTISS would gain compensation from Virginia M edicaid,
Tenncare, M edicare, and the private insurance com panies,to w hich they w ere not entitled by
fraudulently ordering, com pleting, and billing for lzrine drug screens that w ere m edically
unnecessary,andtheresultsofwhich werenotused in directing the care ofthepatient.
4. In furtherance ofthe conspiracy,and to effect its object,CKW ,M CRW ,BETH
PALm ,JOSEPH D. W EBB, and M ARY ELIZABETH CURTISS knowingly subm itted and
caused billing in the am otmtof $12,459,211 to be subm itted to Virginia M edicaid,Tenncare,
M edicare,and theprivate insurance companiesand received over$1,203,000 to which they were
notentitled.
5. ln furtherance ofthe conspiracy,and to effectits object,both CKW and M ARY
ELIZABETH CURTISS m ade a urine drug screen by BristolLaboratories,LLC,a precondition
for obtaining a weekly Suboxone, Subutex or generic buprenorphine prescription for opiate
addicted patients.
6. A1lin violation ofTitle 18,United StatesCode,Section 1349.
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C O U NT TH R EE
The Grand Jury chargesthat:
1. The lntroduction is re-alleged and incop orated by reference into this count of the
indictm ent.
2. On oraboutand between Decem ber 1,2010 and N ovember 16,2011,in the W estern
DistrictofVirginia and elsewhere,M ARY ELIZABETH CURTISS,as principaland aiderand
abettor, knowingly and willfully received rem uneration, specifically, directly and indirectly,
overtly and covertly,in retum forrefening individualsfor the furnishing and arranging for the
furnishing of any item and service for which paym ent may be made in whole or in partby
M edicaid orM edicare,both ofwhich areFederalhealth careprogrnms.
3.A11inviolationofTitle42,UnitedStatesCodeSection 1320a-7b(b)(1)(A).
C O U N T FO U R
The GrandJury chaxgesthat:
The lntroduction is re-alleged and incorporated by reference into this count of the
indictm ent.
2. On oraboutand between December1,2010 and Novem ber 16,2011,in the W estern
District of Virginia and elsewhere,BETH PALIN and JOSEPH D.W EBB,as principals and
aiders and abettors,knowingly and willfully paid rem uneration,directly and indirectly,overtly
and covertly,in retum forrefening individualsforthefum ishing and arranging forthefurnishing
ofany item and service forwhich paymentm ay be m ade in whole orin partby M edicaid orby
M edicare,both ofwhich areFederalhealth care progrnm s.
3.A11inviolationofTitle42,United StatesCodeSection 1320a-7b(b)(2)(A).
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