The former owner of a Rogers-based medical supply and billing company and its former chief executive officer were both sentenced this week in U.S. District Court for their roles in leading a conspiracy to defraud the U.S. government and also private workers’ compensation insurers by way of a billing and kickback fraud scheme with multiple physicians and medical clinics, and schemes with two Louisiana physicians to ship medications to them from Arkansas and distribute those medications from their clinics in violation of Louisiana laws.
U.S. District Judge Timothy L. Brooks sentenced company owner Hunter Matthew Burroughs, age 44, to four years’ (48 months’) incarceration in the Federal Bureau of Prisons, followed by a three-year term of supervised release.
Judge Brooks further ordered Burroughs to pay a total of $3,525,219.77 in restitution, primarily to the U.S. Department of Labor, Office of Workers’ Compensation Programs, which handles workers’ compensation claims on behalf of federal employees, to pay a forfeiture money judgment of $4,022,873.00 representing his unlawful gain from the criminal scheme and issued him an additional $25,000 fine.
Judge Brooks sentenced company CEO Stephen Keith Andrews, age 50, to two and a half years’ (32 months’) incarceration, followed by a three-year term of supervised release. Judge Brooks further ordered Andrews to pay a total of $2,353,591.84 in restitution, primarily to the Office of Workers’ Compensation Programs, and to pay a forfeiture money judgment of $508,838.57.
According to the defendants’ guilty pleas, Burroughs, who in 2011 founded the Rogers company, and Andrews, who first served as a sales manager for the company, and later as its chief executive officer, defrauded both federal and private workers’ compensation insurers in schemes that ran until 2017.
The basic premise of the health care fraud scheme was that Burroughs, Andrews, and other individuals associated with the Rogers company recruited physicians to dispense pain creams and patches to their workers’ compensation patients by offering them a split of the profits collected from successfully billing insurers, typically 50 percent.
After signing contracts with physicians, Burroughs and Andrews caused the Rogers company to supply them with pain creams and patches, and to act as the billing agent for the physicians, handling all of the paperwork and submitting fraudulent claims to both the U.S. Department of Labor, Office of Workers’ Compensation Programs, which covers all federal employees, and to private insurers as well.
The company billed insurers at markups of anywhere from 15 to 20 times what the medications actually cost, and then paid the physicians unlawful kickbacks on amounts collected. The company’s former billing director, Amanda Dawn Rains, pleaded guilty to her role in the same conspiracy on October 6, 2021.
Additionally, Burroughs and Andrews conspired with Louisiana physicians Robert Dale Bernauer, Sr. and Robert Clay Smith to have the Rogers company ship medications to the doctors, and bill insurers for their prescriptions, despite knowing neither physician had the required Louisiana license to dispense medications from his clinic. Bernauer, who ran a clinic in Lake Charles, La., pleaded guilty to his role in the conspiracy on July 30, 2021.
Smith, who ran a clinic in Alexandria, La. pleaded guilty to his role in the conspiracy on March 29, 2022, but later attempted to withdraw that guilty plea, failed, and was sentenced to four years’ (48 months’) incarceration.
These two sentencing hearings bring to a close the criminal cases against Burroughs and Andrews, which began Feb. 28, 2022, when a federal grand jury in Fort Smith returned a 12-count indictment, charging with conspiracy to commit health care fraud, conspiracy to commit wire fraud, and wire fraud.
On Jan. 11, 2023, a second federal grand jury, also in Fort Smith, returned a superseding indictment, adding detail to the criminal allegations. And on Sept. 20, 2023, both Burroughs and Andrews waived further indictment and entered pleas of guilty to a criminal information charging the above-described conspiracy.
Because the restitution obligations are shared amongst all defendants in these related cases, the total Burroughs and Andrews must pay in restitution plus forfeitures is $8,081,931.34.
This does not include a $664,176.30 payment Bernauer made in 2021 to the Office of Workers’ Compensation Programs for his portion of the loss but does include Smith’s shared responsibility for $827,083.40 of the total restitution due in the cases. Rains and Bernauer still await sentencing for their roles in the criminal conspiracy.
U.S. Attorney David Clay Fowlkes of the Western District of Arkansas made the announcement.
