LONDON, Ky.—A federal jury in London has convicted a doctor, his wife and their clinic of drug trafficking, health care fraud and money laundering, for orchestrating a scheme in which they made millions of dollars by unlawfully prescribing large amounts of prescription pills to citizens of eastern Kentucky.
Dr. James "Ace" Chaney, 51, was convicted of conspiracy to commit drug trafficking, 62 counts of illegal distribution of controlled substances, 2 counts of maintaining a premise for drug distribution, conspiracy to commit money laundering, 20 counts of money laundering, conspiracy to commit health care fraud and 84 counts of health care fraud.
Lesa Chaney, 50, the President and CEO of Ace Clinique of Medicine, LLC, was convicted of conspiracy to commit drug trafficking, 2 counts of maintaining a premise for drug distribution, conspiracy to commit money laundering, 20 counts of money laundering, conspiracy to commit health care fraud and 84 counts of health care fraud.
Ace Clinique of Medicine, LLC, was found guilty on over 180 counts of drug trafficking, health care fraud and money laundering.
The jury rendered its verdict after 13 hours of deliberation, following seven weeks of trial.
From 2006 to 2014, James and Lesa Chaney owned and operated Ace Clinique of Medicine, LLC, in Hazard, Ky. The evidence established that Dr. Chaney pre-signed prescriptions for controlled substances, to be filled out by clinic staff while he was vacationing or otherwise not present at the clinic. The evidence also established that Dr. Chaney knowingly provided prescriptions for controlled substances to individuals who were diverting the pills for sale and to individuals that were abusing the drugs. Dr. Chaney also required all of his patients to undergo monthly urine drug screening to test for the presence of the drugs he prescribed, as well as illegal narcotics. When the results showed the patients were not taking the prescribed pills, or were taking illegal narcotics, Dr. Chaney directed his staff to alter the test results to falsely indicate an appropriate result. These fraudulent test results were then submitted to Medicare, Medicaid and private insurers for payment. From 2009 to 2011, they billed Medicare for more urine drug screen tests than any provider or laboratory in Kentucky.
The evidence at trial also showed that patients would frequently wait eight hours or longer, each month, to be seen by a health care provider at the clinic. The examinations would then typically be of short duration and the patient would receive a prescription for controlled substances. The Chaneys would nonetheless bill for an office visit that falsely indicated a thorough physical examination had occurred. The evidence further showed that the Chaneys billed Medicare for work Dr. Chaney allegedly did while he was vacationing outside of the United States. Dr. Chaney also wrote prescriptions for controlled substances to an employee of the clinic, which he then took for himself.
The Chaneys billed Medicare more than $9,500,000 and billed Medicaid more than $6,300,000 during the period of the conspiracy. The money the Chaney’s made from the scheme was used for personal purchases, including a private plane, houses, vehicles, travel and personal luxury items.
"The defendants in this case combined a massive illegal drug distribution scheme with a massive healthcare fraud scheme," said Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky. "The resulting criminal enterprise harmed countless Kentuckians, and sent the fraudulent bill to the American taxpayer. It is difficult to overestimate the importance of this victory in the effort to rid eastern Kentucky of this sort of criminal conduct, which has caused so much damage to our communities. Our trial team and our law enforcement partners at the FBI and the Kentucky State Police performed admirably in bringing these defendants to justice and they deserve our thanks."
"The devastation of patients’ lives to facilitate the Chaney’s’ lavish lifestyle caused great harm to the people of southeastern Kentucky," said Howard S. Marshall, Special Agent in Charge of the Louisville Division of the FBI. "The Federal Bureau of Investigation and its law enforcement partners will stay committed to the dismantlement of significant drug trafficking organizations in Perry County and the rest of Kentucky."
U.S. Attorney Harvey, Special Agent in Charge Marshall and Richard Sanders, Commissioner of the Kentucky State Police, jointly announced the verdict.
The investigation was conducted by the FBI and the Kentucky State Police.
Assistant U.S. Attorneys Roger West and Andrew Sparks prosecuted this case on behalf of the federal government.
The Chaneys are scheduled for sentencing on August 25, 2016, at 1:30 p.m. The most serious offenses carry a maximum penalty of 20 years in prison. The Court, however, will impose sentence after consideration of the U.S. Sentencing Guidelines and the applicable federal statutes.
Original article from justice.gov.