A Hollidaysburg couple — both doctors — involved in a health care scheme pleaded guilty to conspiracy to defraud the United States, according to the U.S. Attorney’s Office for the Middle District of Pennsylvania.

John H. and Paula Z. Johnson, both 62, pleaded guilty to the charge, while John Johnson also pleaded guilty to one count of conspiracy to commit health care fraud, the office stated in a news release. The Johnsons received more than $1 million in kickback payments, according to an outline of the case, which states the scheme began in 2016.

During a portion of the time noted in the Pennsylvania case, John Johnson was serving an 84-month prison sentence for conspiracy to commit mail fraud and wire fraud in connection with a separate health care fraud scheme, this one in Florida.

According to U.S. Attorney Gerard M. Karam, in 2016, John Johnson, a physician with specialized training in anesthesiology, entered into an agreement with other individuals to defraud health insurance programs by billing them illegally for expensive tests known as “urine drug tests.”

One person Johnson conspired with was Rodney L. Yentzer, who pleaded guilty for his role in related offenses in March 2022, and is awaiting sentencing, the office stated.

The report states that Johnson and Yentzer carried out the agreement through several different groups of pain management practices located throughout central Pennsylvania, known as Lighthouse Medical and Pain Medicine of York, also called PMY.

Yentzer, who had no medical training, acquired PMY in 2014 at the suggestion of John Johnson, who was Yentzer’s business partner. PMY absorbed Lighthouse Medical in 2017, and PMY closed permanently in November 2019 after law enforcement agents executed search warrants at its various locations, the report states.

In 2016, Lighthouse Medical, under the direction of John Johnson, operated a drug testing laboratory on its premises. The laboratory could perform urine drug testing on site, the Middle District office said, noting the testing, when used legitimately, is a method to screen patients for the presence and specific amounts of various substances.

A very high percentage of the patients of Lighthouse Medical (and, subsequently, PMY) were prescribed with opioid medications at each monthly visit. The testing could be used, for instance, to check whether such patients were taking their medications as prescribed or taking illegal recreational drugs in addition to their prescribed medications.

The scheme involved urine drug tests because they were typically reimbursed at a high rate by Medicare and private insurance programs, the report states.

In March 2016, Johnson and Yentzer agreed with the new owners of a rural, 25-bed “Critical Access Hospital” located near the border of Florida and Alabama to “sell” Lighthouse Medical’s urine drug testing laboratory services to the hospital. In exchange, the hospital purchased the exclusive right to bill for payment and collect payments from patients and insurance programs. The hospital agreed to pay Lighthouse Medical a kickback of $900 per test.

As a Critical Access Hospital under federal law, the hospital received very favorable payment from Medicare and private insurance programs, including, for example, for urine drug testing. Thus, even while paying a $900 kickback per test to Lighthouse Medical, the hospital was still able to collect and keep a significant amount of money over and above that amount, the news release stated.

The owners of the hospital also used other laboratories like Lighthouse Medical in a similar pass-through manner, the report states.

As a result, the hospital was able to bill for a number of laboratory tests that far exceeded what would normally be associated with a small facility of its kind, and Lighthouse Medical was paid far more than what it would have typically received for urine drug testing from Medicare and other insurers.

On July 12, 2016, the hospital paid Lighthouse Medical $816,300 for 907 urine drug tests. Approximately one week later, the hospital paid Lighthouse Medical $628,200 for nearly 700 tests, according to the news release.

In total, the owners of the hospital billed others, including private insurers, approximately $1.4 billion for various laboratory testing services that were not medically necessary. The majority of that amount was due to urine drug testing.

Lighthouse Medical received $2,341,775 in kickback payments over a four-month period, with 85% of that amount going to John Johnson and the remaining amount going to Yentzer, the report states.

Prior conviction

In addition to pleading guilty to conspiracy to commit health care fraud in the kickback scheme, the Johnsons conspired to evade payments to the U.S. Government that John Johnson was required to make for a prior criminal conviction, the government said in the news release as it laid out the case against the Johnsons.

In July 2015, John Johnson was indicted for various tax offenses in the U.S. District Court for the Western District of Pennsylvania, the report states.

In September 2016, he was charged in the U.S. District Court for the Southern District of Florida with conspiracy to commit mail fraud and wire fraud in connection with a separate health care fraud scheme. In early 2017, John Johnson knew that he was likely going to prison for these offenses, so he approached Yentzer and got him to agree to place Paula Johnson, who had not practiced medicine in years, on the PMY payroll.

In June 2017, John Johnson was sentenced to an 84-month term of imprisonment for the various offenses with which he had been charged. He was also ordered to repay the U.S. Government over $3 million in restitution for fraudulent health care billing and unpaid taxes.

Even following his imprisonment, Johnson and Yentzer remained in close contact through phone and in-person visits, with Johnson providing direction to Yentzer. During conversations, Johnson and Yentzer sometimes used coded language to describe sensitive subjects, including the term “toy” to refer to money and the term “toy box” to refer to bank accounts.

John Johnson knew that PMY continued to be highly profitable, in large part owing to its urine drug testing billing. Specifically, PMY billed every patient for two urine drug tests at each visit: one test a presumptive “screen” for the presence of certain substances and the second a definitive test for specific levels of 22 different substances. This testing protocol had been put in place by John Johnson when he ran Lighthouse Medical, and he instructed Yentzer to do the same at PMY. Yentzer followed this direction.

From mid-2017 until late 2019, PMY submitted bills just to Medicare for about $10 million in urine drug testing, with well over $4 million being paid out. The Johnsons and Yentzer devised various other ways to funnel money to the Johnsons so that they could benefit from this wealth without the money being captured for John Johnson’s restitution payments.

Among other things, Yentzer purchased a car for the Johnsons’ son and leased an Audi Q5 for Paula Johnson, at her request. Yentzer also made $28,000 in contributions to their children’s 529 college savings accounts, paid over $40,000 in legal bills for “asset and estate planning,” made over $40,000 in payments toward personal loans, and covered other large bills, all with the knowledge of both John and Paula Johnson. On a number of occasions, Paula Johnson requested these payments directly from Yentzer or his assistant, the report states.

PMY shut down abruptly in November 2019 after search warrants were executed because it was no longer able to retain medical providers to see patients. In January 2020, in a recorded prison call, Yentzer stated to John Johnson, that “if there’s anything left, I will make sure Paula gets, uh, a piece.” He added that “whatever’s left” after satisfying certain creditors he would “divvy up.” Yentzer made this statement despite the fact that Paula Johnson had been formally terminated by PMY in November 2019.

A sentencing date for the Johnsons has not been set, according to the release.

The maximum penalty for conspiracy to defraud the United States is 5 years in prison, followed by supervised release and a fine. The maximum penalty for conspiracy to commit health care fraud is 10 years in prison, followed by supervised release and a fine.