2 doctors indicted in ongoing fraud case involving AL lawmaker

Updated: Aug. 8, 2018 at 5:33 PM CDT
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MONTGOMERY, AL (WSFA) - Two additional defendants are now indicted in an ongoing health care fraud investigation involving outgoing Alabama state Rep. Ed Henry, R-Hartselle.

According to federal court records, the two new defendants are doctors who owned practices in Huntsville and Decatur. Both of those practices independently contracted with Henry's corporation, MyPractice24, to provide services to Medicare Part B patients with chronic illnesses.

The indictment says both doctors, Punuru J. Reddy, with Reddy Practice in Decatur, and Nicole D. Scruggs, who owns Legacy Medical Care, LLC in Huntsville, "knowingly and willfully" participated in a scheme involving Henry's corporation, MyPractice24.

Reddy and Scruggs reportedly waived co-pays for patients and filed false claims with Medicare. Those false claims would result in higher reimbursements for the services provided to the patients.

"Defendant Henry and his co-conspirators conspired to and did knowingly and willfully offer and pay and solicit and receive remuneration, including kickbacks and bribes, directly and indirectly, overtly and covertly, in cash and in-kind, to any person to induce such person to purchase, lease, order, and arrange for and recommend purchasing, leasing, and ordering any good, facility, service, and item for which payment may be made in whole or in part under a Federal health care program, that is, Medicare."

Prosecutors allege this activity violates the anti-kickback statute.

In the scheme, the indictment alleges that Henry assured Reddy a physician could "write off' a copay obligation if a patient refused to pay. Henry said, to do so, all that would need to do is write "financial distress" on the patient's bill. The claims would then be submitted to CMS for Chronic care management services that falsely reflected the actual charges for the services provided.

The indictment later indicates Henry and Scruggs entered into a similar agreement, waiving copays for chronic care management services "thus creating the potential that patients obtained unnecessary services".

Henry was initially indicted for running a similar operation at Family Practice in Montgomery, owned by Dr. Gilberto Sanchez, now embattled in an ongoing federal pill mill investigation. These counts were charged in the initial indictment.

Henry, who also appeared before the court Wednesday, did not make further comments on the case. He has always maintained his innocence previously issuing a statement saying, "My goal was to help patients, and I did."

Henry is charged with:

•    Conspiring to pay kickbacks and to defraud the United States. 
•    Paying unlawful kickbacks
•    Conspiring to commit health care fraud
•    Health care fraud
•    Conspiracy to commit money laundering

Reddy and Scruggs are both charged with two counts of conspiracy to defraud the United States. Both were released on a signature bond and cannot practice medicine.

Henry represents District 9 in the Alabama House of Representatives covering Cullman, Marshall, and Morgan counties in north Alabama.

Henry has been a vocal member of the state Republican Party. He filed articles of impeachment against former Gov. Robert Bentley, defended former Chief Justice Roy Moore amid allegations of sexual misconduct during Moore's high-profile run for Congress, and served as the co-chair of Donald Trump's presidential campaign in Alabama.

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