The Indictment of a Consultant
For many years, Ron Halstead D.C., a non-practicing chiropractor, worked as a healthcare consultant who presented well-publicized seminars to chiropractors on how to boost their incomes. On February 4, 2003, a federal jury in Clarksburg, West Virginia found Halstead guilty of conspiracy, healthcare fraud, and money laundering in connection with advice he gave to Robert B. Burns, Jr., D.C. Two chiropractors who worked at Burns’ chiropractic office in Morgantown, West Virginia, William C. Filcheck, D.C. and Scott G. Taylor, D.C. were also found guilty of conspiracy and healthcare fraud. Burns fled the United States and was fighting extradition from Ireland at the time of the trial.
According to the indictment, in addition to owning and operating the chiropractic office, on Halstead’s advice, Burns established a medical office and a management company. The stock of the medical office was held in the name of a plenary licensed physician who also worked at the medical office. When that licensed physician retired, he was replaced by another medical doctor. However, through a series of agreements and leases, Burns actually managed and controlled the medical office that, according to the indictment, was formed solely to provide a means for a physician to order services that Medicare and other insurers would not cover (or cover only to a limited extent) if they were ordered by a chiropractor. Patient referral and consultation forms were included in patient files but, according to the indictment, the medical doctor never saw the patients at all or only saw the patient after the chiropractic services were performed and billed. See Indictment in U.S. v. Burns, No. 1:01 CR 45, filed 9/7/01 (N.D. W.Va.).
The indictment also alleged that the chiropractors used scripts created and provided by Halstead to urge patients to undergo and continue treatment. As an incentive, patients were told no co-pays would be accepted. To maximize reimbursement, services rendered were “upcoded” and other services were unbundled.
The money laundering charges related to transfers Burns and Halstead made from the medical office and the management company to personal accounts, some of which were off-shore.
Halstead was sentenced to 121 months in prison. The author of this paper was advised that he is currently under house arrest in Arizona and his conviction is under appeal. His sentence is also at issue because of the United States Supreme Court’s decision in Blakely v. Washington, No. 02-1632 (U.S. June 24, 2004). The Judge found aggravating factors and sentenced him to a longer sentence that would render him ineligible for a minimum security confinement.
Although there is no question that certain of the activities were fraudulent, what is significant about Halstead’s conviction is that he never provided any professional services and had no ownership interest in any of the entities. Nevertheless, the fact that he provided advice about a corporate structure that was then used to violate the law was sufficient for an indictment and a conviction.
