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Ron Halstead and Two Other Chiropractors
Convicted in Health Fraud Scheme
Stephen Barrett, M.D.
Ronald L. Halstead, D.C. has taught chiropractors how to boost
their incomes for more than 20 years. In 1981, when he was still
seeing patients, an advertisement for
his audiotaped practice-management course stated that in 1980
he had seen 725 to 769 patients per week and had grossed $786,000
but, due to investments and "proper income tax planning,"
had paid no income tax for 7 consecutive years . Not long afterward,
he was convicted of Medicaid fraud in Illinois. In 1982, he moved
to Scottsdale, Arizona, where he set up Practice
Systems, a practice-management firm that taught chiropractors
throughout the United States how operate high-volume MD/DC practices
for rehabilitating injured patients. During the 1990s, ads for
his seminars boasted that many of his clients had increased their
income by $50,000 per month and that a few were producing over
$300,000 per month.
On February 4, 2003, a federal jury in Clarksburg, West Virginia,
jury found Halstead and two West Virginia chiropractors guilty
of charges relating to a conspiracy to commit mail fraud and health
care fraud. Halstead was found guilty on one count of conspiracy,
14 counts of health care fraud, and 11 counts of money laundering;
and William C. Filcheck Jr. D.C., and Scott G. Taylor , D.C. were
both found guilty of one count of conspiracy and 14 counts of
health care fraud. A fourth defendant, Robert B. Burns, Jr., D.C.,
who owned the clinics in which the fraud took place, has been
arrested in Ireland and is fighting to prevent extradition to
face the charges [2,3]
The scheme involved the submission of false claims to Medicare
and private insurance companies for more than $2.8 million in
order to evade payment limitations. According to the indictment:
- Burns is licensed to practice chiropractic in West Virginia
and Pennsylvania. Between 1993 and 1997, he retained Halstead
as a consultant.
- Between 1985 and 1996, Burns owned and operated Mountaineer
Chiropractic Center in Morgantown, WV. In 1994, in order to facilitate
the fraudulent scheme, he formed Priority One Medical Associates
(another clinic) and West Virginia Health Care Management. Filcheck
and Taylor were employed by both clinics. Halstead, as a consultant,
advised the others about how to carry out the scheme.
- Priority One was formed as a professional medical corporation,
which can only be owned by a licensed medical doctor, not a chiropractor.
Between 1994 and 1998, Priority One's stock was fraudulently
held in the name of a medical doctor ("Dr. A") who
was hired by Burns to work at Priority One. In 1995, "Dr.
A" retired and was replaced by "Dr. B" as medical
doctor at the clinic. However, Burns managed and controlled both
clinics through a series of leases and other contractual agreements.
- Insurance programs only pay for services that are considered
"medically necessary." Chiropractic services are usually
limited to twelve visits per year and generally cover manual
manipulation for treating "spinal subluxations." During
the years in which the scheme took place, Medicare did not cover
x-ray examinations, other diagnostic tests, or other services
performed or ordered by a chiropractor. But it did cover some
services by nonphysician personnel that were "incident to
medical treatment," when such services were under the direct
supervision of a medical doctor and billed under the doctor's
Provider Identification Number. Two other insurance plans that
the clinic billed had no chiropractic coverage, one had a $500
limit, and the fourth had a $1,000 limit.
- In order to increase reimbursement, services performed or
ordered by Burns, Filcheck, or Taylor were fraudulently billed
as though they had been performed or ordered by "Dr. A"
or "Dr. B," who had determined that they were medically
necessary. The defendants also conspired to send false letters
of medical necessity under the doctors' names without their knowledge.
- Burns and Halstead caused Priority One employees to engage
in marketing efforts that included telemarketing, free dinners,
and free initial examinations to individuals with "quality"
insurance coverage. The chiropractors
used scripts created by Halstead to (a) persuade new patients
that they had serious spinal conditions, even if they did not;
(b) persuade patients that chiropractic could effectively treat
them; and (c) overcome any objections to the type, frequency,
length, and cost of the proposed treatment . As an additional
inducement, new patients were told that no co-payments would
be collected (which is illegal). The clinic staff then followed
protocols devised by Halstead to order treatment based on the
scope of the patients' insurance coverage rather than their actual
physical conditions and needs.
- To maximize reimbursement, some services were "upcoded,"
some services were billed that had not been rendered, and some
services were unbundled (billed as two separate services when
only one was performed).
- To conceal the conspiracy, the clinic staff placed fraudulent
documents in patient files, including "case study"
and "physician referral" forms which falsely stated
that "Dr. A" or "Dr. B" had determined, provided,
and supervised the patient's care when, in fact, services were
billed in the medical doctor's name before the medical doctor
had ever seen the patient. Halstead provided software that enabled
the others to send false letters of medical necessity in the
name of the medical doctor without the medical doctor's knowledge
- Burns and Halstead conspired to transfer funds from the accounts
of Priority One and Health Care Management into their personal
or company accounts in violation of the money laundering statute
Sentencing in the case is likely to take place in April or
May. Meanwhile, Halstead, Filcheck, and Taylor remain free on
Indictment ||| Patient Retention Scripts
- This DC made nearly $800,000 in
1980. Advertisement for the Halstead Practice Management
Course, Digest of Chiropractic Economics, Sept/Oct 1981.
- Harvey M. Chiropractors,
consultant convicted of health care fraud in fed. Clarksburg
Exponent Telegram, Feb 5, 2003.
- News release. Office of the U.S. Attorney Northern District
of West Virginia, Feb 4, 2003.
- Barrett S. Patient retention scripts.
Chirobase, Feb 16, 2003.
- Indictment. United States of
America v Robert B. Burns, Jr at al. In the U.S. District Court
for the Northern District of West Virginia. Criminal No. 1:01
CR 45, Filed Sept 7, 2001.
Awareness Newsletter. Defense Criminal Investigative Service,
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This article was revised on December