U.S. Attorney Damien M. Diggs | U.S. Department of Justice
A former hospital CEO in Texas has been sentenced to 36 months in federal prison for conspiring to violate the Anti-Kickback Statute. The announcement was made by U.S. Attorney Damien M. Diggs.
Jeffrey Paul Madison, 49, from Burnet, Texas, along with several others, was found guilty by a jury on November 30, 2023. The trial lasted seven weeks and took place before U.S. District Judge Jeremy D. Kernodle.
Madison agreed to pay $5,343,630 to settle allegations under the False Claims Act related to illegal payments made to physicians for laboratory referrals in violation of the Anti-Kickback Statute.
Matthew John Theiler received an 18-month sentence and a $75,000 fine on November 20, 2024. David Weldon Kraus was sentenced to 22 months and fined $25,000 on December 5, 2024.
On January 12, 2022, multiple individuals were indicted for conspiring to commit illegal remunerations against the Anti-Kickback Statute. This statute prohibits offering or receiving payments for referrals covered by Medicare and other federal health care programs.
The case involved two rural Texas hospitals: Little River Healthcare (LRH) in Rockdale and Stamford Memorial Hospital in Stamford. They partnered with Boston Heart Diagnostics (BHD), based in Framingham, Massachusetts. BHD processed blood tests while hospitals billed insurers at higher rates than BHD could as a clinical lab.
Physicians were incentivized through management services organizations (MSOs) disguised as investment opportunities but served as means for kickbacks tied to laboratory referrals. Hospitals paid marketers who then kicked back funds to referring physicians ordering BHD tests directly or through hospitals.
Several defendants pleaded guilty before trial including Jeffrey Paul Parnell and others involved in facilitating physician referrals for kickbacks.
In January 2022, Robert O’Neal pleaded guilty to conspiracy charges related to illegal remunerations and money laundering within this scheme.
Peter J. Bennett was convicted of money laundering conspiracy among other charges in July 2023 after creating sham trusts used for laundering healthcare kickback proceeds amounting over $2 million through various accounts linked with his law firm.
The investigation was conducted by several agencies including the U.S Department of Health and Human Services Office of Inspector General along with assistance from the U.S Secret Service among others; prosecution led by Assistant U.S Attorneys Adrian Garcia et al.,
