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Local woman gets 42 months in prison in kickback scheme

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A Tennessee health care executive has been sentenced to 42 months in prison for her role in a $4.6 million kickback scheme, according to U.S. Attorney Don Cochran for the Middle District of Tennessee.

On August 29, Brenda Montgomery, 71, of Camden, was sentenced by U.S. District Judge William Campbell, Jr., of the Middle District of Tennessee.  Judge Campbell also ordered Montgomery to forfeit $595,676.80.  Montgomery pleaded guilty on Jan. 7, to one count of conspiracy to violate the anti-kickback statute, and seven counts of violating the anti-kickback statute. As part of her guilty plea, Montgomery admitted that she agreed to pay John Davis, the former CEO of Comprehensive Pain Specialist (CPS), illegal kickbacks in exchange for his arranging for Medicare referrals for durable medical equipment (DME) ordered by CPS employees.

The Department of Justice said that Davis agreed to arrange for referrals of DME for Medicare beneficiaries from the providers he supervised in exchange for kickbacks equaling 60 percent of the Medicare proceeds.  In addition, Montgomery and Davis took a number of steps to conceal their illegal agreement, including making kickback payments through a nominee, creating and filing false tax documents, and, for Davis, intervening as CEO to prevent the owners of CPS from obtaining their own Medicare DME supplier numbers that would have allowed CPS to bill for its own Medicare DME orders.

According to the Department of Justice, beginning in or around May 2015, Montgomery renegotiated her illegal agreement with Davis to further obscure their personal contract from Medicare and from CPS owners and employees, the court found.  From approximately May 2015 until approximately November 2015, Montgomery agreed to pay Davis $200,000 for the sham purchase of a shell entity known as ProMed Solutions, LLC (ProMed).

Montgomery again sought to renegotiate the sham transaction with Davis after she complained that her referrals from CPS had been lower than expected.  Montgomery ultimately paid $150,000 for ProMed.  The true purpose of this payment was to induce Davis to continue driving CPS referrals to CCC Medical.

The Court further found that Montgomery received as much as $2.9 million in fraudulent reimbursements from Medicare.  In addition, Montgomery admittedly paid more than $770,000 in illegal kickbacks to Davis.  Davis was tried for his role in the conspiracy on March 26.  On April 4, a jury in the Middle District of Tennessee returned a verdict of guilty on one count of conspiracy to defraud the United States and to violate the anti-kickback statute, and seven counts of violating the anti-kickback statute.  Davis’ sentencing has not yet been scheduled.

Cochran, along with Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, Special Agent in Charge Derrick Jackson of the U.S. Department of Health and Human Services Office of Inspector General’s (HHS-OIG) Atlanta region, Special Agent in Charge John F. Kihn of the U.S. Department of Defense Criminal Investigative Service’s (DCIS) Southeast Field Office and Director David Rausch of the Tennessee Bureau of Investigation were instrumental in the prosecution of this case.

This case was investigated by the HHS-OIG Atlanta region, the DCIS’s Southeast Field Office and the Tennessee Bureau of Investigation Medicaid Fraud Control Unit.  Assistant U.S. Attorney Henry Leventis and Trial Attorney Anthony J. Burba of the Criminal Division’s Fraud Section are prosecuting the case.

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