On November 22, 2021, the U.S. Department of Justice (“DOJ”) announced a $9 million civil consent judgment related to False Claims Act violations (“FCA”) involving Dr. Daniel McCollum, who also entered a guilty plea related to healthcare fraud conspiracies.  

Dr. McCollum is a South Carolina chiropractor and businessman who owned and operated pain management clinics, laboratories, and a pharmacy in South Carolina.  Dr. McCollum also operated pain management clinics in North Carolina and Tennessee.  He was accused of violating the federal Anti-Kickback statute, Stark Law, and FCA.  The federal Anti-Kickback Statute (“AKS”) prohibits, among other things, knowingly and willfully paying or receiving remuneration in exchange for federal healthcare program referrals.  Remuneration includes anything of value.  The Stark Law prohibits physicians from making referrals for certain designated healthcare services payable by Medicare or Medicaid to entities with which the physician (or an immediate family member of the physician) has a “financial relationship,” which includes ownership interests and compensation arrangements.  And the FCA prohibits any person from knowingly presenting, or causing to be presented, a false or fraudulent claim for payment to the federal government. 

In April 2015, three former employees sued Dr. McCollum under the qui tam provisions of the FCA.  The FCA allows whistleblowers (also known as relators) to bring cases on behalf of the government, who may takeover, or intervene, in the case.  In May 2017, another former employee sued Dr. McCollum under the qui tam provisions of the FCA.  In May 2019, the United States intervened in several claims against certain defendants.   

In resolving the civil and criminal matter, Dr. McCollum admitted to (1) violating the AKS by paying illegal kickbacks for UDT referrals, (2) causing the submission of claims to Medicare for UDT services based on illegal referrals from physicians with whom McCollum had financial relationships, in violation of the Stark Law, and (3) causing claims to be submitted for medically unnecessary services and medications.  According to the government, Dr. McCollum admitted that his conduct “constituted misrepresentations, fraudulent omissions and/or deceptive conduct, and that he engaged in this conduct with an intent to deceive the United States and cause the United States to pay false or fraudulent federal healthcare program claims.”  Besides agreeing to a $9 million consent judgment, Dr. McCollum pled guilty to conspiracy to pay illegal kickbacks and to defraud healthcare programs.  He faces up to five years in prison and a fine of up to $250,000. 

The DOJ’s November announcement is the second press release related to companies owned or partially owned by Dr. McCollum.  In September 2021, the DOJ announced that the U.S. District Court for the District of South Carolina entered default judgments against several businesses owned by Dr. McCollum.  As noted in the press release, the court entered a default judgment in July 2020 for $4.2 million against ProLab, LLC and ProCare Counseling Center, LLC.  Then in September 2021, the court entered a default judgment for over $136 million against Oaktree Medical Centre P.C., FirstChoice Healthcare P.C., Labsource LLC, Pain Management Associates of the Carolinas LLC, and Pain Management Associates of North Carolina P.C.  

The DOJ noted that the $9 million civil judgment and the guilty criminal plea were obtained because of the coordinated efforts of DOJ’s civil division, several sections of the U.S. Attorney’s Office for the District of South Carolina, the FBI, the state attorney general’s office, HHS-OIG, and the Defense Criminal Investigative Service (DCIS).  The related cases are captioned United States ex rel. Rauch, et al. v. Oaktree Medical Centre, P.C., et al., No. 6:15-cv-01589-DCC (D.S.C.); United States ex rel. Mathewson v. Dr. Daniel A. McCollum, et al., No. 6:17-CV-01190-DCC (D.S.C.); and United States ex rel. Hawkins v. Pain Management Associates of the Carolinas, LLC, et al., No. 8:18-cv-02952-DCC (D.S.C.).  The stipulation of settlement can be read here

The attorneys at Chilivis Grubman represent both companies and individuals in connection with government investigations, both criminal and civil, and in False Claims Act litigation.  If you have any questions related to such matters, please contact us today.