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Press Release

Tioga County Physician And One Other Plead Guilty To Health Care Fraud Charges

For Immediate Release
U.S. Attorney's Office, Middle District of Pennsylvania

WILLIAMSPORT – The United States Attorney’s Office for the Middle District of Pennsylvania announced today that Dr. John Terry, age 65, of Wellsboro and Stephen Heffner, Jr., age 46, of Elkland, pleaded guilty today before Chief United States District Court Judge Christopher C. Conner in Williamsport.

In January 2016, a criminal information was filed in U.S. District Court in Scranton against Terry in connection with fraudulent prescriptions he wrote for Oxycodone, a Schedule II controlled substance.

According to U.S. Attorney Peter Smith, in April 2013, Dr. Terry caused Medicare to be billed for fraudulent prescriptions intended for Heffner knowing that Heffner was not his patient and that the Oxycodone was not actually intended for Heffner but for Dr. Terry’s patient, David Hatch, age 28, of Addison, New York.  Medicare paid for the prescription received by Heffner but actually delivered to Hatch.

Dr. Terry also provided prescriptions for Oxycodone and other narcotics to another patient, Thomas Ray, age 52, of Wellsboro, who Terry should have known was not seeking the drugs for legitimate medical purposes.  Medicaid paid for medically unnecessary prescriptions written for Ray.

Heffner and Hatch were charged with theft from the Medicare Program arising out of the same incident in separate criminal informations.  The government also filed a plea agreement with Hatch.  He is scheduled to appear before Chief Judge Conner in Harrisburg to enter a plea of guilty on February 11, 2016.

All three defendants were originally charged together with Ray, in an indictment by a federal grand jury in August 2014.  Ray previously pled guilty before Chief Judge Conner and is scheduled to be sentenced on January 20, 2016. 

Terry and Heffner are scheduled to be sentenced on April 4, 2016 in Williamsport.

The investigation was initiated in June 2013 by the Drug Enforcement Administration (DEA) drug diversion agents and the Department of Health and Human Services Office of Inspector General.  During the execution of a federal search warrant at his office on July 8, 2013, Dr. Terry voluntarily agreed to surrender his medical license and his DEA registration.

The Pennsylvania State Police assisted in the investigation. Prosecution is assigned to Assistant United States Attorney Michelle Olshefski.

Criminal Informations are only allegations. All persons charged are presumed to be innocent unless and until found guilty in court.

A sentence following a finding of guilt is imposed by the Judge after consideration of the applicable federal sentencing statutes and the Federal Sentencing Guidelines.

The maximum penalty for health care fraud under federal law is 10 years of imprisonment, a term of supervised release following imprisonment, and a fine. Under the Federal Sentencing Guidelines, the Judge is also required to consider and weigh a number of factors, including the nature, circumstances and seriousness of the offense; the history and characteristics of the defendant; and the need to punish the defendant, protect the public and provide for the defendant's educational, vocational and medical needs. For these reasons, the statutory maximum penalty for the offense is not an accurate indicator of the potential sentence for a specific defendant.


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Updated January 15, 2016

Health Care Fraud