The U.S. Department of Justice announced on January 15 that Jeffrey Paul Madison, the former chief executive officer of a Texas hospital, was sentenced to 36 months in federal prison for conspiring to violate the federal Anti-Kickback Statute (AKS). In October 2024, Madison also agreed to pay over $5.3 million to settle allegations under the federal False Claims Act. Other co-conspirators were also charged with lesser prison sentences and monetary fines.
The conspiracy scheme involved kickback payments (which were illegally disguised as returns on investments) to incentivize physicians to make referrals to rural hospitals and an affiliated lab for specialized advanced cardiovascular lipid testing. The hospitals relied on a network of marketers who operated management services organizations (MSOs) that offered investment opportunities to physicians who ordered lab tests from the hospital or affiliated lab. The hospital paid a portion of its lab revenues to the marketers who, in turn, paid a portion of such funds to the referring physicians. Madison allegedly agreed to the kickback scheme, authorized the payments to the marketers, and knowingly signed false certifications in Medicare cost reports with respect to the hospital’s compliance with the AKS.
This case was investigated by the U.S. Department of Health and Human Services’ Office of Inspector General, with assistance from other government agencies.
