Texas Chiropractor Sentenced in Workers’ Compensation Scam

workmens-comp-formFor several years, Garry Craighead had a sweet deal going. Then the federal government discovered things were going sour. On June 10, Craighead, an Austin-area chiropractor, was sentenced in U.S. District Court for the Western District of Texas to 14 years in prison, plus three years of supervised release, for receiving kickbacks from health care providers in return for steering patients, many of them covered by union-sponsored plans, to the providers. He also was ordered to pay nearly $18 million in restitution to the Department of Labor’s workers compensation program and forfeit certain assets. Craighead had pleaded guilty to the false billing scheme last December following a probe by the FBI, IRS, U.S. Army, U.S. Postal Service and DOL’s Office of Inspector General. The scam ran parallel to another one engineered by an employee of Craighead.

Central to this saga is the Department of Labor’s Federal Employees Compensation Act (FECA), better known as workers’ compensation. The program offers benefits in the wake of job-related injuries and illnesses to roughly three million federal civilian and postal employees. The DOL reimburses health care providers, without requiring a finding of fault, for medical, rehabilitation and drug costs incurred in treating eligible patients. FECA also covers wage replacement, vocational training and survivors’ benefits in the event of a worker’s death. The basic disability benefit is two-thirds of an injured worker’s pre-disability wage, 75 percent if the employee has household dependents. Historically, U.S. Postal Service employees have been the heaviest users of the program.

Garry Craighead, now 49, a Leander (near Austin), Tex.-based chiropractor, saw the program as an opportunity to receive free money from the Labor Department. In addition to his professional practice, Craighead owned a chain of physical rehabilitation centers in several Texas cities known as Union Treatment Centers (UTC). The enterprise served various federal and postal employees union health plans, including the National Association of Letter Carriers, the American Postal Workers Union, the American Federation of Government Employees and the National Rural Letter Carriers Association. Craighead had a special affinity for musicians; his website, at least as of this June, noted that he is “the doctor to over 100 Rock N Roll bands and other celebrities.”

According to federal prosecutors, Garry Craighead had more than medicine or rock n’ roll in mind. During 2008-15, he allegedly solicited and received millions of dollars in kickbacks from health care providers in return for referring FECA patients to these providers. The scheme cast a wide net. Service providers included pharmacies, hospitals and ambulatory surgical centers. Services included drug prescription, surgery and diagnosis. Making referrals in itself, of course, is not illegal. But soliciting bribes from service providers in exchange for steering customers to them is illegal. And the likelihood that U.S. taxpayers unknowingly were subsidizing these transactions provided an extra incentive for federal investigators. Craighead apparently wasn’t the only scam artist in the UTC orbit.

The undoing of Garry Craighead originated with a former employee, a Dallas lawyer named Tshombe Anderson. His wife, Brenda Anderson, his sister Lydia Bankhead, his sister-in-law Janet Anderson, and his niece Lydia Taylor had bilked FECA out of $30 million. The U.S. Justice Department charged these five individuals with conspiracy to commit mail fraud. Craighead, advised by his sister-in-law and UTC chief operating officer, Christine Craighead, fired Mr. Anderson, who worked at a Craighead-owned enterprise called CCMD/Creekside Practice Management. To hear Anderson’s attorney, Douglas Greene Sr., explain things, the Craigheads were trying to cover their own tracks. “He (Anderson) wasn’t giving them (the Craigheads) the kickback money they wanted,” said Greene.  Christine Craighead denies all wrongdoing. “The government wants me to plea so I will help them,” she wrote in an e-mail. “I am a pawn in this game. …We had prepared a comprehensive report, at our own expense, and gave the agents what they needed to proceed. This man (Anderson) and his family would still be getting away with this if it wasn’t for me.” She emphasized that she and her brother-in-law had performed a public service: “The government can’t acknowledge this without admitting CCMD/Creekside, a company owned by Garry Craighead, played a significant role in bringing this situation to light. Our routine audits and comprehensive results saved the U.S. government years of investigating and saved a large amount of U.S. taxpayer money.”

But Justice Department prosecutors believed Garry and Christine Craighead had been conducting their own scam even as they were exposing someone else’s. Back in 2013, a former chiropractor at UTC’s Austin office, Lisa Wheeler, filed a False Claims Act qui tam (i.e., whistleblower) suit in San Antonio federal court against the Craigheads and the company. And in June 2015, the feds joined in the suit, alleging that the Craigheads concocted or inflated medical bills for Department of Labor reimbursements. The lawsuit read: “Defendants unlawfully enhanced their revenue by engaging in overbilling and kickback schemes. As a result of these schemes, the defendants were among the most prolific billers in the FECA program.” False or questionable payments to UTC during January 2009-December 2013, said the Justice Department, exceeded $40 million. Assistant U.S. Attorney John LoCurto emphasized that Christine Craighead owed her job to family connections and had no training in the area of medical billing. “Christine Craighead had virtually unfettered authority over the billing department,” the suit read. “She answered only to Garry Craighead. The absence of meaningful corporate governance and oversight allowed Christine Craighead to function without constraint.” A criminal suit followed.

Garry Craighead is no longer with Union Treatment Centers, which since has been renamed UTC Health & Rehab Management. There wouldn’t be much of a point in his remaining anyway. The DOL had tossed him out of the workers’ comp program in 2013. And on December 4, 2015, he pleaded guilty to solicitation and receipt of illegal federal payments, engaging in monetary transactions in property derived from unlawful activity, and money laundering. He was arrested on March 2 of this year for receiving an additional $600,000 in kickbacks from a Houston pharmacy, spending the funds in a variety of ways including posh hotels and limo service, lying to government investigators and testing positive for illegal drug use. This past June 10, Craighead received a 14-year prison sentence plus three years of supervised release. In addition, he was ordered to pay the Labor Department $17,908,170 in restitution and to forfeit personal assets including his personal residence and aircraft.

Federal officials are satisfied with the outcome. Special Agent in Charge Steven Grell, U.S. Department of Labor, Office of Inspector General, put it this way: “We hope that today’s sentencing will serve as a strong deterrent to health care providers who contemplate soliciting or receiving kickbacks in return for referring Federal Employees Compensation Act claimants.” FBI Special Agent in Charge Christopher Combs stated: “The sentence handed down today should send a strong message to health care providers, and others who contemplate engaging in illegal kickback schemes, that they will be held accountable for their actions.” The case still has legs. Christine Craighead faces health care fraud charges. Tshombe Anderson and various extended family members face their own day of reckoning. And UTC-affiliated health care providers may have to answer some questions. Members of federal employee unions may be taking a special interest in this case.