Federal lawsuit: $25M fraud at Tennessee senator's clinic

A federal lawsuit claims a Tennessee senator and other officials at a now-shuttered pain clinic company defrauded Medicare and Medicaid of more than $25 million

NASHVILLE, Tenn. -- A Tennessee senator and other officials at a now-shuttered pain clinic company are facing a federal lawsuit that claims they defrauded Medicare and Medicaid of more than $25 million.

The complaint filed Monday in Nashville by federal and state authorities alleges that Comprehensive Pain Specialists, Republican state Sen. Steve Dickerson and others submitted claims for a variety of unnecessary procedures and falsified documents.

In particular, the lawsuit says the clinic chain and its officials profited tremendously from a policy of ordering urine drug testing on virtually every patient on essentially every visit.

The company found the urine drug tests especially lucrative, with revenues of tens of millions of dollars "for what was largely unnecessary medical testing," the lawsuit states.

Government authorities are seeking more than $50 million in damages in the case, which they began investigating in response to whistleblower complaints.

In response to the lawsuit, Ed Yarbrough, Dickerson's attorney, said, "Dr. Dickerson is an honest man. We will prove that in court."

The lawsuit also targets former physician-owners Peter Kroll and Gilberto Carrero; Russell Smith, who had owned a clinic of which Comprehensive Pain Specialists took over operations; and former company CEO John Davis, who was convicted by a jury in April of charges of running a kickback scheme for referring durable medical equipment prescriptions to another medical facility.

The lawsuit paints a scheme that lasted more than six years, until the company began to dissolve in 2018. It says Davis in 2011 began a standing order to automatically conduct quantitative drug testing, specimen validity testing, genetic blood testing and psychological testing on essentially all patients.

It also says the company required providers to send all urine samples and blood work for testing at a lab the company began running, since the reimbursement rate for lab testing is almost five times that of on-site testing.

The scheme continued amid a separate incident in May 2017 when Kroll caused more than 2,500 claims, for which Medicare paid the company almost $350,000, while he was in Italy on vacation, causing Kroll to lose his billing privileges with Medicare, the lawsuit says.

"We are aware of the allegations and very familiar with the actual facts," said Dan Martin, an attorney representing Kroll. "Dr. Kroll did not engage in any wrongdoing whatsoever, and we look forward to correcting the government's misunderstanding of the facts."

The lawsuit alleges Dickerson submitted more than 750 false claims for specimen validity, genetic and psychological testing, as well as acupuncture, amounting to more than $4 million in penalties.

Additionally, it says Dickerson and Carrero may have voiced concerns about Davis' conduct as CEO, but instead of taking action against him chose "to keep the status quo of money flowing into their bank accounts."

The complaint says Dickerson and the other owners also agreed in January 2014 to increase Davis' annual salary to $180,000 and reward him with quarterly bonuses of 7% of the company's net profits, along with a discretionary bonus and five weeks of paid vacation.


Associated Press reporter Travis Loller contributed to this story.