Indictment charges Decatur doctor, Ed Henry with kickbacks and bribery

Rep. Ed Henry

Doctors in Decatur and Huntsville were charged with participating in a bribery and kickback scheme, and additional charges were filed against state Rep. Ed Henry in a federal indictment filed last week.

The Hartselle lawmaker was originally indicted May 31 for allegedly engaging in a conspiracy with a Montgomery doctor, Gilberto Sanchez, to defraud Medicare. The superseding indictment filed last week alleges he engaged in similar conspiracies with Dr. Punuru Reddy of Decatur and Dr. Nicole Scruggs of Huntsville.

Henry’s lawyer said prosecutors filed the new indictment to put pressure on his client.

“By adding the two new defendants into Ed’s case, they hope that one or both will succumb to the pressure and then become witnesses for the prosecution,” Birmingham lawyer Max Pulliam said.

Reddy and Scruggs, who did not return calls Tuesday, have not filed responses to the superseding indictment. Henry pleaded not guilty to the original indictment and has filed motions seeking to dismiss it.

Sanchez, who pleaded guilty to drug distribution, health care fraud and money laundering charges in November, is not named as a defendant in the indictment.

“In an effort to apply additional pressure to Ed Henry, the government has charged two additional citizens with being partners in crime with Ed,” Pulliam said. “These citizens practice medicine in Decatur and Huntsville, and neither has any relationship with Sanchez, the real criminal. Like Ed, these citizens helped people get the health care they needed and saved the taxpayers money.”

Henry's business, MyPractice24 Inc., provided chronic care management for the patients of doctors who contracted with the company. Chronic care management involves coordinating medical care and billing issues for Medicare patients with two or more serious health conditions.

Henry entered into an agreement to provide chronic care management services to Reddy’s Medicare patients at a rate of $22.65 per month in August 2015, according to the indictment. Consistent with Medicare regulations, the doctor would bill Medicare for the services, and Henry’s company would invoice the doctor.

Because chronic care management involves no face-to-face time with a doctor, and is handled primarily by telephone calls between the patient and a non-physician, the indictment indicates many patients would reject the service if they were required to pay their own money, either through the 20 percent co-pay amount or if their deductible had not been met.

“Henry assured Reddy that a physician could ‘write off’ a co-pay obligation if a patient refused to pay,” according to the indictment. “Henry said that to do so, all that Reddy would need to do would be to write ‘financial distress’ on the patient’s bill.”

Henry instructed Reddy that he should refrain from submitting reimbursement claims to Medicare until well after the beginning of the year “so as to allow patients to pay their annual deductibles on other services,” according to the indictment. To facilitate this, the indictment alleges, Henry agreed to delay invoicing Reddy until after the doctor had received reimbursement from Medicare.

Reddy began sending bills for the co-pay amounts on the chronic care management services soon after entering into the agreement with Henry, but patients resisted. “The patients stated that they did not wish to pay out-of-pocket for a service that did not include seeing or speaking to a physician,” according to the indictment.

Reddy instructed his front desk staff to waive the co-pay amount, typically $8, on services provided by Henry’s company anytime a patient complained about the charge, according to the indictment. He initially signed each waiver. He eventually “grew tired of signing co-pay waiver documentation forms,” according to the indictment, and had his staff use his signature stamp to waive the co-pays of patients who complained.

Non-routine waivers of Medicare co-pays are not considered kickbacks, according to the U.S. Department of Health and Human Services guidelines, but doctors who routinely waive co-pays with the intent of attracting patients violate the federal anti-kickback law.

Pursuant to Henry’s instructions, Reddy also refrained from submitting claims to Medicare for chronic care management services provided from January 2017 until May of that year, according to the indictment, thus increasing the likelihood the patients’ deductibles already had been met. Henry’s company delayed submitting invoices to Reddy for those months until June 2017, when he sent combined invoices for $31,137, the indictment claims.

The allegations concerning Henry’s interactions with Scruggs are similar, although in Scruggs' case the indictment claims Henry bribed her by hiring an employee to work in her office at no cost to the doctor.

“MyPractice24 would pay the entirety of the employee’s salary,” according to the indictment. “Nevertheless, Henry advised Scruggs that Scruggs would be permitted to use the MyPractice24 employee to perform clinical work not related to chronic care management.”

The employee “spent significant amounts of time doing work at Scruggs’ direction that was unrelated to chronic care management,” the indictment alleges. “Henry knew that the employee was doing so.”

Henry also paid an employee at Sanchez’s office, according to the original and superseding indictments. In that case, Henry initially paid the employee $1 per referral, leading to monthly kickback payments of hundreds of dollars, according to the indictment. He later hired her and had her provide chronic care management services for Sanchez’s patients while also providing services for Sanchez, according to the indictment.

According to Alabama Secretary of State records, Henry incorporated MyPractice24 in July 2015, shortly after Medicare guidelines were changed to allow reimbursement of chronic care management services. The indictment alleges his partner in the venture was a Decatur resident identified only as “G.C.” According to Secretary of State records, Greg Cheatham is a director of MyPractice24. A call to Cheatham’s office was not returned.

A call to Reddy’s practice was not returned Tuesday. A voicemail option for patients calling his office for chronic care management was not operational. His lawyer, Anthony Joseph of Birmingham, did not return a call late Tuesday.

Scruggs did not return a call to her practice, Legacy Medical Care LLC.

The Alabama Board of Medical Examiners database shows no restrictions on either Reddy’s or Scrugg’s medical licenses and reflects no public reprimands or disciplinary actions.

“Ed paid no kickbacks to anyone and like Ed, these citizens are guilty of no crimes,” Pulliam said.

Sanchez’s medical license was surrendered Dec. 31, 2017, while he was under investigation by the board, according to the database.

Henry’s arraignment on the superseding indictment is scheduled in Montgomery for Aug. 8 before U.S. District Judge Wallace Capel Jr. A pretrial conference in Henry’s case is scheduled the following day.

Henry announced early in 2017 he would not seek a third term this year. He is still the state representative, earning $1,927 every two weeks.

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Indictment charges Decatur doctor, Ed Henry with kickbacks and bribery