A former Middle Tennessee health care executive will spend 42 months in prison for his role in a nearly $4 million kickback scheme, federal prosecutors said.
John Davis, 42, of Franklin, who ran Comprehensive Pain Specialists from 2011 to 2017, was convicted last year of one count of conspiracy to defraud the United States and seven counts of violating anti-kickback laws, according to a news release from the Department of Justice.
The former CEO was sentenced to prison on Thursday by U.S. District Judge William Campbell Jr. of the Middle District of Tennessee. The judge also ordered Davis to forfeit $770,036.00.
CPS, based in Brentwood, was at one time the largest pain clinic chain in the American Southeast, with as many as 40 clinics across 10 states. The company collapsed in 2018, closing or selling all clinics with little warning to patients.
According to evidence at his 7-day trial, Davis abused his position as CEO to arrange for referrals of Medicare Durable Medical Equipment (DME) orders to his co-conspirator, Brenda Montgomery and her company, CCC Medical.
Evidence showed Davis operated a shell company, ProMed Solutions, which he registered in his wife’s name. Davis received more than $770,000 in illegal kickbacks disguised as payments to his wife and ProMed.
Together, Davis and Montgomery pocketed more than $2.9 million dollars in improper reimbursements from Medicare. Davis used company funds from CPS to pay bonuses to providers who ordered DME for Medicare beneficiaries and referred those orders to CCC Medical. He received 60% of the Medicare profit from these referrals, while the company he ran lost the opportunity to bill for these services.
Evidence at trial also showed that in April and May of 2015, Davis became concerned about the size of the kickback payments he was receiving from CCC Medical. It also showed Davis and Montgomery engaged in a sham sale of ProMed, which had no assets, no employees, no equipment, no office space and no customers other than CPS.
Additional evidence showed Davis and Montgomery set the price for the sham sale based upon the average monthly kickbacks that Davis had been paid for the previous eight months.
When CPS referrals slowed, Davis agreed to reduce the purported “purchase price” to $150,000. When Davis received the last check for the sham sale, he began cutting off referrals to CCC Medical.
Montgomery pleaded guilty Jan. 7, 2019, to one count of conspiracy to defraud the United States and violate the Anti-Kickback Statute, and seven counts of violations of the Anti-Kickback Statute.
She is serving a 42-month prison sentence.