NASHVILLE, Tenn. – August 29, 2019 - A Tennessee health care executive was sentenced to 42 months in prison yesterday for her role in a $4.6 million kickback scheme, announced U.S. Attorney Don Cochran for the Middle District of Tennessee, 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.

Brenda Montgomery, 71, of Camden, Tennessee, 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, 2019, 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.  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.

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, 2019.  On April 4, 2019, 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.   

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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NASHVILLE, Tenn. April 4, 2019  – A federal jury sitting in Nashville, Tennessee, found the former CEO of a Tennessee pain management company guilty today for his role in an illegal kickback scheme involving approximately $4 million in tainted durable medical equipment (DME) claims to Medicare, announced U.S. Attorney Don Cochran for the Middle District of Tennessee.

Joining in making the announcement were 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 (HHS-OIG) Atlanta region, Special Agent in Charge John F. Khin of the U.S. Department of Defense Criminal Investigative Service’s (DCIS) Southeast Field Office, Special Agent in Charge Matthew Line of the IRS-Criminal Investigation, Charlotte Division-Nashville Field Office, and Director David Rausch of the Tennessee Bureau of Investigation.

After a seven-day trial, John Davis, 41, of Franklin, Tennessee, the former CEO of Comprehensive Pain Specialists (“CPS”) of Gallatin, Tennessee, 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.  Sentencing will be scheduled for later this year before U.S. District Judge William L. Campbell Jr., who presided over the trial.

According to evidence presented at trial, Davis abused his position as CEO of CPS to arrange for referrals of Medicare DME orders to his co-conspirator Brenda Montgomery and her company, CCC Medical, located in Camden, Tennessee.  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 over $770,000 in illegal kickbacks.  Together, Mr. Davis and Montgomery pocketed over $2.4 million dollars in improper reimbursement from Medicare.  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% of the Medicare profit from those referrals, while the company he ran footed the bill. 

Evidence at trial 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.  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 8 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. 

Brenda Montgomery pleaded guilty in January 2019 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 currently scheduled to be sentenced on May 3, 2019.

This case was investigated by HHS-OIG; Defense Criminal Investigative Service; the Internal Revenue Service-Criminal Investigation; and the Tennessee Bureau of Investigation Medicaid Fraud Control Unit and was brought as part of the Medicare Fraud Strike Force, under the supervision of the U.S. Attorney’s Office for the Middle District of Tennessee and the Criminal Division’s Fraud Section.  The case was prosecuted by Assistant U.S. Attorney Henry Leventis of the Middle District of Tennessee and Trial Attorney Anthony Burba of the Fraud Section.

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