HAMMOND – Federal and state officials announced today the filing of a civil Medicaid fraud complaint against Don and Marilyn Wagoner in a case that claims the former physicians received more than $1.1 million in overpayments.
The complaint is the latest development in a saga that saw the deaths of more than two dozen people caused by illegal prescribing practices at two Wagoner Medical Clinic locations, one in Kokomo and another in Burlington.
In general, United States Attorney Thomas L. Kirsch II and Indiana Attorney General Curtis Hill on Friday announced the complaint against Don Wagoner, 81, and Marilyn Wagoner, 80, and their multiple business entities for filing false Medicaid claims, according to a U.S. Department of Justice release.
From 2011 to 2013, the married couple practiced medicine together at the Wagoner clinic locations, establishing “a routine practice of requiring patients" who sought a prescription for opioids or other pain medication to give a urine sample.
The sample was ultimately tested for the presence or absence of nine or more drugs or drug classes, reported the DOJ.
The Wagoners would, say DOJ officials, use a multiplexed screening kit that cost them no more than roughly $5. They would then test “each single urine sample for the same patient on the same day using the simple kit.”
In an effort to defraud the Medicaid program, though, the Wagoners would overbill Indiana Medicaid, receiving $171 per patient despite the fact state Medicaid billing rules allowed them to bill only $20 per patient.
“Defendants concealed this fraud by falsely certifying to Indiana Medicaid that they had collected and separately analyzed nine or more urine samples from each patient, when in fact they only had collected and analyzed one urine sample,” reported the DOJ.
In total, the Wagoners employed their scheme in over 6,400 claims, receiving a total overpayment from Indiana Medicaid of more than $1.1 million.
Now, the Wagoners face a staggering financial punishment, as the state and federal government is allowed to recover three times the amount of the fraudulent claims submitted to Indiana Medicaid.
Also allowed is a civil penalty of $5,500 to $11,000 per false claim.
The DOJ reported Friday that three percent of recoveries under the federal False Claims Act is used to fund the cost of future health care fraud investigations and cases.
“Although they no longer are endangering vulnerable Medicaid patients by practicing medicine, former physicians Don Wagoner and Marilyn Wagoner cannot be allowed to retain the fruits of their fraudulent Medicaid claims,” said Kirsch in the release.
According to the DOJ, the suit, or complaint, resulted from an investigation by the United State Attorney’s Office for the Northern District of Indiana and the Indiana Medicaid Fraud Control Unit.
Officials first raided the two Wagoner Medical Clinics in March 2013, arresting several clinic doctors and employees roughly a month later in a case put together by Kokomo police and U.S. Drug Enforcement Agency officers.
In all, prosecutors filed 95 charges in April 2013 against the Wagoners and their associates.
Prosecutors say more than two dozen people died as a result of the illegal prescribing practices at the facilities, including pre-signed prescriptions utilized by physician assistants.
In November 2016, Howard County officials dismissed the case against Marilyn Wagoner, who was charged with 19 felonies.
According to Howard County Prosecutor Mark McCann, the dismissal was in response to Wagoner’s declining mental health, including memory loss and a continuing decline in cognitive function that made her unable to stand trial.
“The way it played out I don’t know that she would have ever made it through a trial or that this would have actually gotten to a trial,” said McCann at the time.
“Based on her condition, I thought it in the best interest of the state and judicial economy to dismiss it,” he said, noting the court would have likely questioned the decision to keep filing continuances and using resources to keep the case on the calendar.
“Was there a perfect outcome in this whole thing? I’d probably say not, but I think we accomplished our goal by shutting down Dr. Wagoner, that clinic and…his pill mills, so I think the state accomplished its goal in that respect,” McCann later added. “That’s an overall opinion as it relates to all of the defendants.”
Marilyn Wagoner was one of nine people charged in 2013 with illegally distributing narcotics at the two Wagoner clinic locations.
Don Wagoner, former head of the Wagoners' operation, was the first to plead guilty in the case.
He pleaded guilty to eight counts of dealing in a narcotic drug. He was sentenced in July 2014 to two years in prison, eight years of in-home detention and 20 years of probation. With a day-for-a-day credit for time served, Wagoner was released from prison March 21, 2015, the Indiana Department of Correction website states.
The Wagoners’ medical licenses were both permanently revoked.