John Davis, 40, of Brentwood, and Brenda Montgomery, 69, of Camden, were each charged with conspiracy to defraud the United States and to pay and receive health care kickbacks and seven counts of paying and receiving health care kickbacks.
Davis is the former chief executive officer of Comprehensive Pail Specialists, a large, multi-state pain management company. Montgomery is the owner, founder and chief executive officer of CCC Medical Inc., a durable medical equipment company with five locations in Tennessee and headquartered in Camden. Davis and Montgomery were arrested Monday morning and appeared Monday afternoon before U.S. Magistrate Judge Alistair E. Newbern of the Middle District of Tennessee.
“Our Medicare program is designed to help those who are most vulnerable and in need of medical services and equipment,” said U.S. attorney Don Cochran. “Stealing funds form our health care system places the vulnerable at greater risk and diverts public funds into the pockets of the greedy individuals who exploit those with the greatest need. We will be un-relenting in our efforts to bring to justice those individuals and corporations who choose to profit at the expense of the health of those individuals with the greatest need.”
“The charges against John Davis and Brenda Montgomery, alleging almost three quarters of a million dollars in illegal health care kickbacks and the submission of over $4.6 million in fraudulent claims to Medicare, demonstrate the Department of Justice’s commitment to protect taxpayer dollars and to hole corporate executives accountable for fraudulent and abusive conduct,” said acting Assistant Attorney General John P. Cronan. “Kickbacks such as those alleged in the indictment distort markets and undermine public trust. The criminal division and our law enforcement partners will continue to root out fraud, waste and abuse in our health care programs, no matter how complex the schemes.”
According to the indictment, from June 2011 to June 2017, Montgomery paid Davis about 60 percent of the Medicare proceeds, as kickbacks, in exchange for Davis directing CPS employees and providers to send Medicare DME orders and referrals to Montgomery’s CCC Medical. It is alleged that Montgomery and Davis used a nominee and filed false tax documents to disguise the kickbacks.
Beginning in or around May 2015, according to the indictment, Davis and Montgomery renegotiated their illegal agreement to further obscure their personal contract from Medicare and from CPS owners and employees. The indictment alleges that from about May 2015 until about November 2015, Montgomery agreed to pay Davis $200,000 for the sham purchase of a shell entity known as ProMed Solutions LLC. Davis and Montgomery renegotiated the sham transaction after Montgomery complained that her referrals from CPS had been lower than expected, and Montgomery ultimately paid $150,000 for the shell, ProMed, according to allegations in the indictment. The true purpose of this payment was to induce Davis to continue driving CPS referrals to CCC Medical, the indictment alleges.
The indictment further alleges that Montgomery, through CCC Medical, submitted more than $4.6 million in fraudulent claims to Medicare, and that Medicare paid a total of $2.6 million on those claims. Further, the indictment alleges that Montgomery paid more than $770,000 in illegal kickbacks to Davis.