GREENVILLE - For six years, whistleblowers and prosecutors have pursued Daniel McCollum and claims the Upstate chiropractor, through a string of pain-management businesses, made millions defrauding government insurance providers.
Now, McCollum faces both a $9 million judgment and up to five years in prison after pleading guilty under the federal False Claims Act. He'll be sentenced at a later date.
The U.S. Attorney's Office in South Carolina announced the terms of the settlement on Nov. 22.
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In 2019, the doors to McCollum's network of pain clinics, doing business as Pain Management Associates, were abruptly shuttered and the federal government joined in lawsuits filed years previously by former employees alleging abuse of the system.
From the beginning of 2011 to the end of 2018, prosecutors allege that McCollum and his pain management clinics paid bonuses to physicians and other health care providers that included amounts based directly on their referrals of urine drug testing to labs that McCollum owned.
The Easley-based chiropractor entered into "direct bill" agreements with physicians and other providers around the country.
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Those providers, after paying McCollum's laboratory a set fee to run the test they ordered, could then bill private insurance companies directly for those tests - generally for much more than they had paid his lab.
In exchange, McCollum induced them to refer tests to his lab that could be billed to Medicare, Medicaid and TRICARE patients.
One urine test could cost up to $4,000, and tests were routine in pain management care as doctors must screen for patient abuse of drugs.
Additionally, McCollum's scheme would create unnecessary prescriptions for pain creams even if the prescription had no legitimate medical purpose, according to prosecutors. In so doing, McCollum would have employees review the personal files of patients and flag those whose insurance would pay for lidocaine cream.
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The scheme was in violation of the federal government's laws against kickbacks and physicians making medical decisions based on financial relationships rather than the best interests of patients, officials said.
In September, a federal judge entered a $140 million default judgment against McCollum over fraud involving labs, and pain and substance abuse counseling clinics. In August 2020, a $4.2 million default judgment was entered against defunct businesses related to the scheme.
"Improper financial relationships between healthcare providers and laboratories can lead to overutilization and increase the cost of healthcare services paid for by the taxpayers," acting Assistant Attorney General Brian M. Boynton of the Justice Department's Civil Division said in the Nov. 22 release. "The provision of medical services and prescriptions should be based on a patient's medical needs rather than the financial interests of providers."