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Chiropractor Pleads Guilty
in Million-Dollar Case

February 27, 1999

United States Attorney J. René Josey announced today that John Gregory Osteen, DC, of Greenville, South Carolina, pled guilty on Thursday, February 2, 1998, to one count of mail fraud related to a scheme to defraud insurance companies by performing unnecessary nerve and vascular tests. Osteen pled guilty before the Honorable William B. Traxler, Jr. at the U.S. District Court in Greenville. Osteen was indicted for the mail fraud scheme in November, 1997 by a federal grand jury. The indictment was the result of a health care fraud investigation conducted by the South Carolina Health Care Fraud Task Force, and included the participation of the Federal Bureau of Investigation, the United States Postal Inspector's Office, the South Carolina Attorney General's Office, and the Fraud Investigation Division of Blue Cross and Blue Shield of South Carolina.

Dr. Osteen formerly operated a number of chiropractic clinics in the Greenville/Spartanburg area under the name Plemmons Clinic. The indictment generally charged that from 1992 through 1994, Osteen ran a scheme to defraud health insurance companies by performing medically unnecessary nerve and vascular tests on Plemmons Clinic patients, Osteen's family members, and others. The indictment alleged that the fraudulent scheme resulted in billings to insurance companies of more than $2,000,000 for unnecessary nerve and vascular tests, and the payment by those companies of more than $1,000,000.

Pursuant to a written plea agreement, Osteen pled guilty to a count in the indictment which related to a Plemmons Clinic patient who was being treated for injuries sustained in an automobile accident. Testimony at the guilty plea hearing established that the patient received an unnecessary vascular test, and her health insurance company, Provident, was then billed for $1,400 for the test. The insurance claim was coded to make it appear that the test was ordered and supervised by a medical doctor, which was not true. The insurance claim also listed several false diagnoses which were designed to make it appear to the insurance company that the patient needed the vascular test. The patient who received the vascular test did not have certain of the symptoms listed on the insurance claim. In addition, the vascular test claim form sent to Provident falsely stated that the patient was not being treated for injuries related to her automobile accident, and did not list the date of the automobile accident as the date of her injuries, instead listing the date of injury as the date on which she received the vascular test. The plea agreement provides that the amount of restitution owed to the insurance companies is not less than one million dollars.

Osteen's sentence will be imposed after the completion of a Presentence Report by the U.S. Probation Office. The case is being prosecuted by Assistant United States Attorney Stanley D. Ragsdale of the Columbia office.

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This article was posted on August 23, 1999.