City doctor pleads guilty to fraud

Johnson also failed to remit payroll taxes for employees

JOHNSTOWN — Dr. John H. Johnson, an Altoona anesthesiologist, entered guilty pleas Thursday to conspiracy to defraud Medicare and Medicaid and failure to remit payroll taxes for employees of his doctor’s office and a local car wash business, Johnny On The Spot.

The charges will land Johnson in a federal prison for seven years.

U.S. District Judge Kim R. Gibson accepted the guilty pleas and the agreement for jail time but ordered a presentence investigation.

Gibson set Oct. 11 for the formal sentencing, although that could change because Johnson’s attorney, John P. Pierce of Washington, D.C., indicated that his client would like to be sentenced at an earlier date.

The resolution of the charges in the U.S. District Court in Johnstown occurred five weeks after Johnson received a five-year federal prison sentence in the Southern District of Florida in Miami for entering into a scheme with other physicians and businessmen to receive reimbursement from insurance companies for expensive, individually prepared compounded pain creams “without analysis of medical necessity.”

The pain cream fraud resulted in more than

$170 million in payments from insurance companies nationwide.

U.S. District Judge Daniel T. K. Hurley ordered Johnson to pay reimbursement of $15 million, the amount of money paid by the insurance companies as a result of his prescriptions for the medically unnecessary pain creams.

At the time of the hearing in Florida, the judge was informed that Johnson was attempting to work out an agreement to dispose of his Pennsylvania charges.

According to the plea agreement read into the record Thursday by Assistant U.S. Attorney Stephanie L. Haines, Johnson will be responsible for another $3,022,476 in payments to the Internal Revenue Service for his failure to remit payroll taxes and as restitution for money he received in “kickbacks” from the scheme to defraud Medicare and Medicaid.

The three-hour hearing Thursday was divided into two parts.

Gibson first heard the charges that involved the failure to send payroll taxes to the government.

According to the charges, Johnson used the tax money to pay expenses associated with Central Anesthesia Corp., his Altoona-based doctor’s office.

From July 1, 2013, through Dec. 31, 2014, he failed to send the government payroll taxes totaling $656,197.

He entered a guilty plea to one count of the federal indictment for not paying $135,112 in taxes for the third quarter of 2013, although he will be responsible for reimbursing the government the entire amount of the unpaid taxes.

Johnson also failed to remit payroll taxes for his business, Johnny on the Spot, on which he owed $54,317.

The second part of the hearing involved the Medicare and Medicaid fraud.

Haines explained that in this case he teamed up with a Greensburg drug testing laboratory, Universal Oral Fluid Laboratory, founded by William J. Hughes.

According to Haines, the Altoona doctor would submit requests to the Greensburg lab for drug tests, and the laboratory would seek reimbursement for the tests from the Medicare and Medicaid.

Johnson would receive payment monthly for referring the cases to the laboratory.

For instance, on Nov. 14, 2011, Johnson received a check from the lab for $126,328. The prosecutor indicated that over the next few months Johnson received payments of $67,941, $32,147, $125,078, $112,719, and $120,510.

The payments continued until November 2013.

According to Haines, the payments, which she twice referred to as “kickbacks,” totaled $2.3 million.

The $2.3 million came from more than $3.4 million the lab received from Medicare and $1.14 million it received from Medicaid.

The money Johnson received was deposited in the account of Lighthouse Medical LLC, Johnson’s company that operated six pain clinics.

Johnson, when sentenced, will be ordered to repay the U.S. Department of Health and Human Services for that money, according to the plea agreement.

The hearing Thursday consisted of Gibson reviewing each case with Johnson to make sure his guilty pleas were voluntary.

Johnson and his attorney did not discuss the case during the lengthy hearing.

While Johnson will receive a seven-year prison sentence, all but two of those years will be served concurrently, or at the same time, as the sentence from Florida.

He will be on supervised release following completion of his prison sentence.

In the Florida hearing, which occurred in mid-May, Johnson’s attorney, Benedict P. Kuehne, described his client as “an excellent physician” but a “terrible businessman.”

He described Johnson’s businesses as a “tangled, messy web,” and stated Johnson became involved in these financial schemes as a “misguided motive to keep his businesses afloat.”


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