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Press Release

Tioga County Physician And Three Others Indicted For Unlawful Distribution Of Controlled Substances And Health Care Fraud

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

     The United States Attorney's Office for the Middle District of Pennsylvania announced today that a Tioga County physician has been charged with unlawful distribution of controlled substances and health care fraud.  Three other individuals are also charged in an indictment returned Tuesday by a federal grand jury in Scranton, Pennsylvania.

     According to United States Attorney Peter Smith, the indictment charges Dr. John Terry, age 63, and Thomas Ray, age 51, both of Wellsboro, Pennsylvania, with Possession with Intent to Distribute a Controlled Substance and Health Care Fraud.  It also charges David Hatch, age 27, Addison, New York, and Stephen Heffner, Jr., age 46, Elkland, Pennsylvania, with health care fraud.  The defendants allegedly aided and abetted each other in a scheme to obtain benefits from a health care program by false and fraudulent pretenses.

     Terry, Hatch and Heffner, Jr. were released after a hearing yesterday in Williamsport before Magistrate Judge William I. Arbuckle, III.  Ray is in state custody on other charges.

     Beginning January 2010 through July 2013, Terry allegedly provided prescriptions for excessive quantities of Oxycodone and other narcotics to individuals who he knew were not seeking the drugs for a legitimate medical purpose.  Terry also allegedly wrote prescriptions for narcotics for individuals who were not his patients, knowing that the federal Medicare program was going to be billed for the unlawful prescriptions.

     During the execution of a federal search warrant at his office on July 8, 2013, Terry voluntarily agreed to surrender his medical license and his DEA registration.

     Prosecution is assigned to Assistant United States Attorney Michelle Olshefski.

     The charges stem from an investigation by Drug Enforcement Administration, the Department of Health and Human Services, Office of Inspector General, and the Pennsylvania State Police.

     “We rely on doctors to be part of the prescription drug abuse solution – not part of the problem,” said Nick DiGiulio, Special Agent in Charge for the Inspector General’s Philadelphia Office.  “Abuse of prescription drugs now kills more people than illegal drug abuse and costs taxpayers many millions of dollars.”

     Indictments and 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 guilty is imposed by the Judge after consideration of the applicable federal sentencing statutes and the Federal Sentencing Guidelines.

     In this particular case, the maximum penalty for the controlled substance violation is 20 years’ imprisonment and 10 years’ imprisonment for the health care fraud violation, under the federal statutes, 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.

Updated April 16, 2015