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Press Release

Physician Sentenced to 7 Years in Prison for Accepting Kickbacks and Failing to Remit Employment Taxes

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

JOHNSTOWN, Pa. - A resident of Hollidaysburg, Pa. has been sentenced in federal court to 84 months in prison, 60 months of which will be concurrent with a sentence imposed in the Southern District of Florida; three years’ supervised release; and was ordered to pay restitution to the Internal Revenue Service of $722,476.55 and to Health and Human Services of $2,300,000, on his convictions of conspiring to commit an offense against the United States and willfully failing to remit employment taxes, Acting United States Attorney Soo C. Song announced today.

United States District Judge Kim R. Gibson imposed the sentence on Dr. John H. Johnson, 55, of Hollidaysburg, Pa. Dr. Johnson will surrender today, June 30, 2017, to the United States Marshal Service to begin serving his 84-month federal prison sentence.

According to information presented to the court and in connection with Dr. Johnson conspiring to commit an offense against the United States:

  • Universal Oral Fluid Labs (UOFL) was a clinical drug testing and drug screening lab located in Greensburg, PA. William Hughes was the owner and operator of UOFL. Dr. Johnson was a PA licensed physician practicing anesthesiology and pain management, who owned and operated a group of pain management clinics.
  •  Both Dr. Johnson and UOFL were enrolled providers in the Medicare program and the Pennsylvania Medicaid program. As a condition of becoming a Medicare and/or Medicaid provider and being authorized to bill Medicare and/or Medicaid, Dr. Johnson and UOFL were required to certify on their enrollment applications, Medicare Form 885B, that they would comply with all applicable federal and state laws, regulations, policies, procedures, and program requirements.
  • UOFL billed, and was paid by, Medicare and Pennsylvania Medicaid for performing drug tests and related services for Medicare and Medicaid beneficiaries who were referred to UOFL by physicians enrolled in the program, including Dr. Johnson. UOFL also billed, and was paid by, various private health care insurance companies in the business of providing health care insurance to individuals and entities under various insurance policies, pursuant to which the private insurers paid UOFL for drug tests and related services performed for insureds who had been referred to UOFL by physicians.
  • From in and or around May, 2011, and continuing thereafter until at least November, 2013, Dr. Johnson did knowingly and intentionally conspire with William Hughes and others to commit offenses against the United States, that is, to solicit and receive remuneration, directly and indirectly, overtly and covertly, in cash and in kind, namely, kickbacks and bribes, from William Hughes and UOFL in return for referring patients to UOFL for the furnishing and arranging for the furnishing of items and services, that is, the referral of patient lab work, for which payment was made in whole or in part under a Federal health care program, namely, Medicare and Medicaid, contrary to Title 42, United States Code, Section 1320a-7b(b)(1)(A).
  • Dr. Johnson received cash payments from William Hughes and UOFL in exchange for referring Medicare and Medicaid patients to UOFL. Likewise, Dr. Johnson received monthly checks from UOFL in exchange for referrals, including Medicare and Medicaid referrals. Dr. Johnson also agreed on the value of the “kickbacks” that William Hughes and UOFL would pay Dr. Johnson for each referral of lab work sent to UOFL by Dr. Johnson. Specifically, the monthly “kickback” checks UOFL paid to Dr. Johnson were paid pursuant to the terms of a “joint venture” that Dr. Johnson entered into with UOFL. Under this “joint venture,” Dr. Johnson referred all of his patients, including Medicare and Medicaid beneficiaries, to UOFL for drug testing and related services. UOFL, in turn, billed third-party payors, including Medicare and Medicaid, for such tests, and then “kicked back” to Dr. Johnson, for each referred patient, reimbursement amounts for the tests that exceeded agreed upon thresholds, which were typically between $100.00 and $150.00. Dr. Johnson received these “joint venture” payments from William Hughes and UOFL solely in exchange for the referrals Dr. Johnson provided to UOFL, and not in exchange for the performance of any other services.
  • Between May 2011 and November 2013, Dr. Johnson received more than $2,300,000 in “kickbacks” from Williams Hughes and UOFL for referrals. UOFL then received millions of dollars from third party payors, including approximately $3,443,528 from Medicare and $1,147,768 from Pennsylvania Medicaid, based on Dr. Johnson’s referrals.

In connection with Dr. Johnson willfully failing to remit employment taxes:

  • On or about April 22, 2002, Central Anesthesia was incorporated with Dr. Johnson as the 100% shareholder who exercised complete control over every aspect of the business affairs. As the owner and operator of Central Anesthesia, Dr. Johnson had the corporate responsibility to collect, truthfully account for, and pay over Central Anesthesia’s payroll taxes to the IRS. Despite withholding payroll taxes from his employees paychecks, Dr. Johnson failed to make payments to the IRS. Specifically, for the taxable third quarter of 2013 (i.e., from on or about July 1, 2013 to on or about September 30, 2013), Dr. Johnson willfully failed to truthfully account for and pay over to the IRS all of the federal income taxes withheld and Federal Insurance Contributions Act (FICA) taxes due and owing to the United States on behalf of Central Anesthesia and its employees, totaling $135,112.

Assistant United States Attorney Stephanie L. Haines prosecuted this case on behalf of the government.

Ms. Song commended the Federal Bureau of Investigation, Health and Human Services Office of Inspector General, the Internal Revenue Service Criminal Investigation, and Pennsylvania Office of Attorney General Medicaid Fraud Control Section for the investigation leading to the successful prosecution of Dr. Johnson.

Updated June 30, 2017