Former Pennsylvania Chiropractor to Serve 4 Years for Fraud

December 22, 2008

A former chiropractor behind a $12.1 million health insurance fraud that federal prosecutors called the largest in western Pennsylvania history was sentenced to repay the money and spend four years in federal prison.

Douglas Henderson, 47, recruited dozens of employees and patients at his defunct Burrell Chiropractic Clinic in Lower Burrell and paid most of them tens of thousands of dollars each in kickbacks to file false claims from 1995 to 2002.

The business closed in 2003 and Henderson voluntarily surrendered his chiropractic license in 2004 as he cooperated with federal investigators. In 2000, auditors for Highmark Blue Cross/Blue Shield first raised questions about claims filed by a relatively small pool of people.

“It’s the highest we’ve ever seen in a health care fraud in this district,” Assistant U.S. Attorney James Y. Garrett said of Highmark’s losses.

Henderson sentence also includes prison time for evading more than $400,000 in income taxes by failing to report the income.

“He lived extremely well, extremely high on the hog as a result of the scheme,” said Garrett, who called the practice “a factory of ripoffs.”

Fifteen former employees or patients have already pleaded guilty and been sentenced — most to probation — for their roles. Four others are scheduled for sentencing in January. Garrett and defense attorneys say dozens more likely participated in the scheme, but there wasn’t enough evidence to charge them.

Henderson suffers from multiple sclerosis and a recent heart attack and walks with a cane. The 47-year-old defendant and his third wife, Kristin, a 36-year-old registered nurse, asked the judge to spare him prison, saying the stress would harm his health.

Garrett asked the judge to sentence Henderson to less than the 70 to 87 months recommended under federal guidelines because he cooperated with authorities, but said Henderson’s health wasn’t reason enough for him to avoid prison entirely.

“I don’t see anything in those records that indicate the defendant has (health) needs that can’t be addressed by the Bureau of Prisons,” Garrett said.

U.S. District Judge Gary L. Lancaster imposed the relatively light sentence after reluctantly acknowledging Henderson’s cooperation, noting it amounted to turning against the very patients and employees he had enlisted in the scheme.

Henderson didn’t comment after the hearing, but his attorney, Thomas Ceraso, called the sentence “extremely fair.”

At his sentencing, Henderson apologized to those affected by the scam: the insurance industry and Highmark, his co-defendants, and his family and friend.

“Conduct like mine increases (the burden) on an already overburdened system,” Henderson said, referring to the health insurance industry. Henderson said the embarrassment he caused family and friends was unforgivable.

Lancaster wasn’t entirely satisfied that prosecutors couldn’t account for the money Henderson stole.

Garrett said he can’t prove what happened to it, though he believes some was used to build a vacation home in Emlenton, which straddles the Venango and Clarion county border about 55 miles north of Pittsburgh. Ceraso said the home, now in Henderson’s mother-in-law’s name, amounts to little more than a hunting camp.

The defense attorney said Henderson has no money squirreled away.

“He had some businesses that went blooey, he put a lot of it back into the practice and he spent some of it,” Ceraso said. “He was an extremely good chiropractor but a horrible businessperson … he has no money left. He has nothing.”

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