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A $1.7 million settlement has been reached in a case against a former physician and his business after he was found to have fraudulently billed the Indiana Medicaid Program for over 5,000 claims, resulting in an overpayment of nearly $1 million, according to the U.S. Attorney’s Office for the Northern District of Indiana.
From 2011 to 2013, former Burlington physician Don J. Wagoner, 89, practiced at Wagoner Medical Center, LLC, of which he was the sole owner. Patients seeking opioid or other pain medicine were routinely required to submit a urine sample to the practice, according to court documents.
These urine screening kits cost the practice up to $10, yet the business billed Indiana Medicaid and received approximately $171 or more per patient for them, according to investigators. According to Indiana Medicaid billing rules, the practice could only bill the program $20.83 per patient. Furthermore, investigators said the business falsely certified to Indiana Medicaid that they collected and sampled nine or more urine samples instead of just one.
The business allegedly submitted over 5,000 claims, collecting a total of nearly $1 million in overpayments. When the fraud was discovered, the business refused to repay the overpayment amount, according to court documents.
In December 2017, federal investigators and the state of Indiana filed a complaint in the U.S. District Court in Northern Indiana under the False Claims Act for the overpayment and other civil penalties. That settlement was officially reached on Wednesday.
In a written statement shared with The Indiana Lawyer, Wagoner’s attorney Christopher Melton, of Bricker Graydon Wyatt, LLP, said the former doctor “strongly disputes the government’s allegations,” and that all that remained for prosecutors to pursue were “hyper-technical” claims.
“Even with the victories that he had already experienced in court in this case, he did not foresee a path forward that did not involve several more years of litigation and appeals before he would ultimately be vindicated,” Melton said. “So after eight years of litigation, he made the reasonable decision to settle the case without any admission of liability and concentrate on spending time with his family rather than continuing to pay attorneys and chemical engineering and medical coding experts to fight a case that had already taken a mental and physical toll on him and his family.”
Wagoner permanently surrendered his medical license in 2013 in connection with a state criminal investigation of his opioid-prescribing practices. In that case, he pleaded guilty to eight counts of dealing in a narcotic drug, conspiracy to commit dealing in a narcotic drug and dealing in a Schedule III controlled substance. The remaining 12 counts were dismissed.
He was sentenced to two years in the Indiana Department of Correction and eight years of home detention.
“Although they no longer are endangering vulnerable Medicaid patients by practicing medicine, former physician Don Wagoner cannot be allowed to retain the fruits of his fraudulent Medicaid claims,” U.S. Attorney Adam L. Mildred said in a written statement. “The U.S. Attorney’s Office will continue to make it a priority to pursue investigations and cases to recover funds that were fraudulently received from the Medicare and Medicaid programs.”
According to the settlement, Wagoner must pay the $1.7 million by June 30, 2026.
The case is United States of America and State of Indiana v. Don J. Wagoner and Wagoner Medical Center, LLC, 2:17-cv-478.
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