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Press Release

Former Owners Of Russell Springs Lab Convicted Of Seventeen Counts of Health Care Fraud

For Immediate Release
U.S. Attorney's Office, Eastern District of Kentucky

FRANKFORT, Ky. – On Friday, a federal jury convicted five former owners of PremierTox, a clinical laboratory in Russell Springs, Kentucky, of seventeen counts of health care fraud, each. The defendants were acquitted on various other counts that alleged related conduct. The seventeen counts of conviction related to medically unnecessary urine drug tests, which were submitted by the defendants’ laboratory to Anthem Blue Cross/Blue Shield with the intent to defraud the health insurer.


The evidence at trial established that Dr. Bryan Wood and Dr. Robin Peavler owned a chain of addiction treatment clinics called SelfRefind, headquartered in Danville, Kentucky. Patients at SelfRefind underwent urine drug testing as part of their treatment protocol. The urine drug testing consisted of screening tests, which indicated whether a drug was in the patient’s system, as well as more sophisticated and precise confirmation tests that were ordered when the treating physician felt it was necessary. At trial, all of the physician witnesses testified that they needed the confirmation test results by the time the patient came in for their next visit.


Until late 2010, SelfRefind used independent labs that returned test results within a week. In late 2010, Drs. Wood and Peavler joined Brian Walters, James Wesley Bottom, and Dr. Robert Bertram, Jr., to form PremierTox, a urine drug testing laboratory. Beginning in October 2010, Dr. Wood and Dr. Peavler directed SelfRefind to freeze its patients’ urine samples and then send them to PremierTox, where they were maintained in a storage facility that PremierTox actually referred to as the “Pee Palace.” As many as 10,000 frozen urine samples were stored in this facility. However, the five owners of the lab – Dr. Wood, Dr. Peavler, Dr. Bertram, Walters, and Bottom – did not have the testing equipment installed until January 2011, and did not begin conducting confirmation tests until April 2011. The evidence established that the significant delay in testing rendered many of the confirmation urine tests useless in the treatment of the SelfRefind patients, and medically unnecessary.


The evidence further established that once PremierTox began testing, the owners prioritized the testing of samples based on eligibility for reimbursement from particular insurance companies. Medicaid and Medicare patients’ samples got tested first, because PremierTox was enrolled with those insurers. PremierTox was not enrolled as a health care provider with Anthem insurance company until August 2011. Immediately after it became eligible to bill Anthem, it removed Anthem patients’ urine samples from the freezers, tested them, and billed the insurer. Some of the Anthem patient samples were actually tested nine to eleven months after they had been collected, and long after they had any value in treating the patient. The jury concluded that Dr. Wood, Dr. Peavler, Dr. Bertram, Walters, and Bottom each acted with specific intent to defraud Anthem, by billing for these long-delayed, medically unnecessary tests.


“Health care fraud victimizes us all, by improperly depleting the critical resources necessary to pay health care costs and, as in this case, by seeing medical professionals brazenly place their financial interests above medical necessity in the treatment of patients,” said Carlton S. Shier, IV, Acting United States Attorney for the Eastern District of Kentucky. “We will continue to make protecting the health care system from fraud a priority, as it promotes better care, places care over greed, and benefits every one of us.”


Sentencing of the defendants is scheduled for August 9, 2017. Any sentence imposed by the district court will be based on relevant facts of the defendants’ conduct and will take into account the U.S. Sentencing Guidelines.


Acting U.S. Attorney Shier and Derrick L. Jackson, Special Agent in Charge of the Department of Health and Human Services, Office of Inspector General’s Atlanta Regional Office, jointly announced the verdict. Assistant U.S. Attorneys Kate K. Smith and Paul C. McCaffrey prosecuted the case on behalf of the government.

Updated April 3, 2017

Health Care Fraud