Feds sue local pain management clinics, owner

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GREENVILLE, S.C. (WSPA) – The federal government is suing local pain management clinics and their owner accusing them of defrauding taxpayers of tens of millions of dollars and providing kickbacks for referrals. 

In a civil lawsuit filed Friday, federal attorneys accuse South Carolina chiropractor Daniel McCollum of “design[ing] and execut[ing] a series of elaborate and extensive fraud schemes to maximize profits at his pain clinics and UDT [urine drug testing] laboratories at the expense of both patients and federal health care programs.”

McCollum owns local pain management clinics Pain Management Associates (PMA), its parent company, Oaktree Medical Centre, and laboratory Labsource, which are also defendants in the suit. 

McCollum referred to his PMA clinics in Easley and Sklyn, S.C. as “pill mills,” according to the suit.

A spokesperson for Pain Management Associates issued the following statement on the federal complaint:

“Pain Management Associates provides passionate, professional, and personal pain management to patients in North and South Carolina who depend on our board-certified physicians for their pain management needs. While loyally serving our more than 200,000 patients at our 11 clinics across the Carolinas, Pain Management Associates is reviewing inquiries from the Department of Justice and will fully respond to all legal filings in the appropriate manner and forum. Pain Management Associates has faced some recent business challenges prompting us to initiate an internal billing audit and corporate restructuring plan. It is our goal to be fully compliant with all regulations governing our industry.”

7News’ calls for comment from Labsource and Daniel McCollum were not immediately returned. 

One of the largest schemes mentioned in the 115-page suit centers around doctors at PMA being paid based on the amount of urine drug tests they referred to labs.

McCollum owns both the clinics and the labs. U.S. attorneys argue this arrangement breaks the law because it incentivizes medical professionals to provide treatments that might not be medically necessary.

The suit alleges that McCollum and his businesses billed federal health care programs for steroid injections and opioid prescriptions “that were not medically necessary or were without a legitimate purpose.”

Local attorney David Rothstein represents three former PMA employees who became whistleblowers.

Rothstein previously told 7News the alleged scheme incentivizes doctors to prescribe opioids. Doctors frequently drug test patients on opioids to make sure they are not abusing their medication.

According to the lawsuit, PMA’s arrangement is illegal because doctors’ pay, and McCollum’s profits, were tied to the volume of their drug testing referrals. 

7News previously reported on the existence of this case.

The suit filed Friday provides new details about the alleged schemes. It says the actions of McCollum and his companies resulted in tens of millions of dollars in false claims to federal healthcare programs. False claims were  submitted to Medicare, Medicaid, and the TRICARE program from 2011 to 2018, according to the filing.

U.S. attorneys argue the defendants knew their schemes were “improper.” Medicare and Medicaid suspended payments to Oaktree for billing taxpayers for medically unnecessary treatments, and then, documents allege, “McCollum simply transitioned his fraudulent schemes to…other entities that he owned and operated.”

The suit also names more than a dozen healthcare professionals, although McCollum is the only person listed as a defendant. 

One of the doctors mentioned in the suit is Dr. Dwight Jacobus, who was recently arrested on 29 warrants for illegally prescribing Xanax, Hydrocodone, and Oxycodone and other drugs. 

The suit says Jacobus was the medical director of Pain Management Associates, and like other doctors there, was able to earn bonuses based off referrals for urine drug testing to McCollum’s laboratories. It alleges he made nearly $750,000 in bonuses and nearly 9,000 referrals from 2012 through 2016. Jacobus’ referrals resulted in nearly $2.5 million in Medicare payments.

Labsource is also accused of paying kickbacks to at least 179 providers across the country to gain their business.

U.S. attorneys are demanding a jury trial and seeking damages and civil penalties. A spokesperson for the U.S. attorneys did not immediately respond to a message seeking comment.

Copyright 2019 Nexstar Broadcasting, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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