Douglas Henderson, D.C., Pleads Guilty
to Massive Insurance Fraud


In December 2005, Douglas Henderson, D.C., of New Kensington, Pennsylvania agreed to plead guilty to criminal charges of insurance fraud. Henderson owned and operated the Burrell Chiropractic Clinic in the community of Lower Burrell and another business called Henderson Automotive. The criminal information document (shown below), which describes the nature of the scheme, states:

Henderson entered his guilty plea in court April 2006 and is scheduled for sentencing in July. The U.S. Attorney's Office has announced that several patients have already been prosecuted for participating in the scheme and that the investigation is continuing.

UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF PENNSYLVANIA

UNITED STATES OF AMERICA

v.

DOUGLAS HENDERSON

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Criminal No. 06-85

(18 U.S.C. §§371, 1347, & 2; 26 U.S.C. §7201)

Filed March 6, 2006

INFORMATION

At all times material to this information:

1. Burrell Chiropractic Clinic, hereinafter referred to as BCC, was in the business of providing chiropractic health care at offices located in the community of Lower Burrell, in the Western District of Pennsylvania.

2 . BCC was a sole proprietorship owned and operated by defendant, DOUGLAS HENDERSON, a doctor of chiropractic medicine, who also maintained a business associated with automobiles, known as Henderson Automotive.

3. Highmark, Inc., doing business as Highmark Blue Cross/Blue Shield, hereinafter referred to as Highmark, was a not-for-profit corporation with offices in Pittsburgh, in the Western District of Pennsylvania, that was in the business of providing insurance coverage for the heal the care needs of individuals. Highmark 's insurance coverage was often provided through group plans I pursuant to contracts reached with businesses and other organizations desiring to provide a benefit to their employees. Highmark's health care insurance contracts, plans, and related agreements with health care providers, constituted a health care benefit program within the meaning of Title 18, United States Code, Section 24(b).

4. Under many health care insurance plans available to residents of the Western District of Pennsylvania, including those offered by Highmark, the costs of certain chiropractic health care services provided to persons covered by valid insurance were eligible for insurance reimbursement at scheduled rates, subject to specific contractual limitations. However, the costs of certain other services sometimes offered by chiropractors were never eligible for reimbursement under Highmark's, and other, health care insurance plans.

5. Pursuant to contractual arrangements common in the health care industry, Bee usually prepared and submitted claims to major insurance carriers, including Highmark, for reimbursement of the costs of covered services on behalf of insured patients. Such claims by BCC were required to be based on accurate and truthful information, and were limited to eligible services, actually rendered, under approved circumstances as verified by treatment records. Claims submitted by BCC to insurance carriers for covered services that were actually provided to insured persons under approved circumstances, were properly reimbursable by payment in authorized amounts directly to it.

6. It was Highmark's practice under most insurance contracts to inform insured patients of claims for benefits submitted to it by health care providers, by mailing statements of benefits to them identifying services reportedly provided, the purported costs, and any reimbursement paid.

7. Defendant, DOUGLAS HENDERSON, had a contract with Highmark for a group health care insurance plan in the name of Henderson Automotive. The contract between Highmark and Henderson Automotive limited coverage under the group plan to its employees and their families.

COUNT ONE

The United States Attorney charges:

8. The allegations of paragraphs 1-7 are incorporated herein, and realleged, as if fully set forth.

9. Between on or about January 1, 1995 and December 31, 2002, in the Western District of Pennsylvania, defendant, DOUGLAS HENDERSON, and others known and unknown to the United States Attorney, did knowingly and willfully execute, and attempt to execute, a scheme and artifice to defraud Highmark, a health care benefit program.

10. It was part of the scheme and artifice to defraud that defendant, DOUGLAS HENDERSON, would and did cause employees of BCC, including Kendra Huddleston, and others known to the United States Attorney, not defendants herein, to prepare and submit to Highmark frequent claims for reimbursement for the cost of health care purportedly provided to certain patients, including Marilyn Marshall, Judith Williamson, Robert Durcho, Eric Ribar, Tina McCurdy, Brandon Burns, and numerous others known to the United States Attorney, not defendants herein.

11. It was part of the scheme and artifice to defraud that such claims caused by defendant, DOUGLAS HENDERSON, to be submitted to Highmark by Bee with regard to these patients were false and fraudulent in that the health care services and treatment described were not actually provided. Instead, the claims submitted followed a predetermined, regular schedule without regard to what, if any, treatment was actually provided to the patients, that was designed by defendant solely to maximize the cost of the billings and resulting payments by Highmark to BCC.

12. It was part of the scheme and artifice to defraud that the patients in whose names such regular, false claims were submitted by BCC knowingly cooperated with defendant, DOUGLAS HENDERSON, in return for financial benefits he offered to them, including free health insurance coverage, kickbacks of a part of the proceeds of the false claims, and other valuable considerations.

13. It was part of the scheme and artifice to defraud that under the influence of such financial inducements, the cooperative patients did not disclose to Highmark that the regularly claimed treatments and services were not provided.

14. It was part of the scheme and artifice to defraud that defendant, DOUGLAS HENDERSON, caused the financial inducements in the form of kickbacks paid by Bee to cooperative patients to be concealed in its accounting records, by falsely recording the expenditures as ordinary business expenses such as advertising, cleaning, repairs and professional services.

15. It was part of the scheme and artifice to defraud that defendant, DOUGLAS HENDERSON, in response to inquiries by Highmark, caused falsified medical records to be prepared and submitted by BCC in an effort fraudulently to verify the authenticity and appropriateness of the services claimed to have been provided.

16. It was part of the scheme and artifice to defraud that the majority of the patients in whose names these regular false claims were submitted held health care insurance offered by Highmark under the Henderson Automotive group plan, which was provided to them without charge by defendant, DOUGLAS HENDERSON, although many were not employees of Henderson Automotive or any associated business, and were not eligible to be members of the group.

17. It was part of the scheme and artifice to defraud that defendant, DOUGLAS HENDERSON, as a result of the regular, false claims in the names of cooperative patients, would and did receive frequent, excessive reimbursement payments from Highmark, which totaled an amount more than $7 million greater than the amount properly payable for eligible health care treatment and services actually provided under approved circumstances.

In violation of Title 18, United States Code, Sections 1347 and 2.

COUNT TWO

The United States Attorney further charges:

18. From on or about January 1, 1995, and continuing thereafter until on or about December 31, 2002, in the Western District of Pennsylvania and elsewhere, the defendant, DOUGLAS HENDERSON, and Kendra Huddleston, Marilyn Marshall, Judith Williamson, Robert Durcho, Eric Ribar, Tina McCurdy, Brandon Burns, and others known and unknown to the United States Attorney, not defendants herein, knowingly and willfully did conspire, combine, confederate and agree together and with each other, to commit an offense against the United States, that is health care fraud, in violation of Title 18, United States Code, Section 1347.

MANNER AND MEANS OF THE CONSPIRACY

19. The manner and means of the conspiracy was in sum and substance as set forth in paragraphs 1-7, and 10-17, above, which are realleged and incorporated herein, as if fully set forth.

OVERT ACTS

20. In furtherance of the conspiracy, and to effect the objects thereof, the defendant, DOUGLAS HENDERSON, and Kendra Huddleston, Marilyn Marshall, Judith Williamson, Robert Durcho, Eric Ribar, Tina McCurdy, Brandon Burns, Phillip Schwartzlander and others known and unknown to the United States Attorney, not defendants herein, did commit and cause to be committed, the overt acts described in the table below, by causing checks to be issued by or on behalf of BCC to provide kickbacks to cooperative patients, and by receiving such checks:

OVERT
ACT
DATE (on
or about)
AMOUNT
RECEIVED BY
(name or initials)
RECORDED AS
EXPENSE FOR
(a)
Feb. 17, 1999
$2,000
JS
Cleaning
(b)
Feb. 19, 1999
$1,000
DW
Office Supplies
(c)
Feb. 22, 1999
$1,000
RB
Advertising
(d)
Feb. 22, 1999
$1,200
SR
Auto Expense
(e)
Nov. 19, 1999
$760
Phillip Swartzlander
Auto Expense
(f)
May 25, 2000
$2,500
SH
Medical Supplies
(g)
July 7, 2000
$3,000
Robert Durcho
Building repairs
(h)
Oct. 6, 2000
$2,500
LM
Legal and accounting
(i)
Oct. 27, 2000
$2,000
HL
Medical Supplies
(j)
Nov. 17, 2000
$1,400
JL
Cleaning & maintenance
(k)
Jan. 5, 2001
$2,050
Tina McCurdy
Cleaning & supplies
(l)
April 4, 2001
$2,280
Kendra Huddleston
Computer repair
(m)
April 16, 2001
$780
ET
Reference materials
(n)
Aug. 3, 2001
$1,000
Brandon Burns
Equipment repair
(o)
Sept. 21, 2001
$1,489
WM
Legal and accounting
(p)
Nov. 7, 2001
$1,734
AM
Clerical help
(q)
Nov. 21, 2001
$1,600
JB
Legal and accounting
(r)
Dec. 7, 2001
$1,000
Eric Ribar
Clerical help
(s)
Dec. 12, 2001
$3,125
Marilyn Marshall
DAH Advertising
(t)
Dec. 15, 2001
$1,305
JH
Clerical help
(u)
Dec. 17, 2001
$2,080
Judith Williamson
Entertainment

21. In furtherance of the conspiracy, and to effect the objects thereof, the defendant, DOUGLAS HENDERSON, and Kendra Huddleston, Marilyn Marshall, Judith Williamson, Robert Durcho, Eric Ribar, Tina McCurdy, Brandon Burns, Phillip Schwartzlander and others known and unknown to the United States Attorney, not defendants herein, did commit and cause to be committed, the overt acts described in the table below, by causing checks to be issued to Highmark by or on behalf of Henderson Automotive to pay monthly premiums for the Henderson Automotive group health insurance plan:

OVERT
ACT
DATE (on
or about)
MONTH PAID
CHECK NUMBER
AMOUNT PAID
(v)
May 10, 2002
March 2002
Check no. 6806; $33,487.97
(w)
June 24, 2002
April 2002
Check no. 7014; $33,487.97
(x)
July 1, 2002
May 2002
Check no. 7014; $33,487.97
(y)
July 1, 2002
June 2002
Check no. 7015; $31,904.85

In violation of Title 18, United States Code, Section 371.

COUNT THREE

The United States Attorney further charges:

22. That on or about the 22nd day of October, 2001, in the Western District of Pennsylvania, defendant DOUGLAS HENDERSON, a resident of Export, Pennsylvania, who during the calendar year 2000 was married, did willfully attempt to evade and defeat a large part of the income tax due and owing by him and his spouse to the United States of America for the calendar year 2000, by preparing and causing to be prepared, and by signing and causing to be signed a false and fraudulent joint U.S. Individual Income Tax Return, Form 1040, on behalf of himself and his spouse, which was filed with the Internal Revenue Service, wherein it was stated that their joint taxable income for said calendar year was $42,722, and that a tax of $26,751 was due and owing thereon, whereas, as he then and there well knew and believed, their joint taxable income for the said calendar year was the sum of approximately $798,637, upon which said joint taxable income there was owing to the United States of America an income tax and self employment tax in the total amount of approximately $330,422.

In violation of Title 26, United States Code, Section 7201.

________________________
MARY BETH BUCHANAN
United States Attorney
PA ID No. 50254

This page was posted on April 22, 2006.

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