Health fraud plea expected

A former Westmoreland County chiropractor will plead guilty to running a scam that bilked a Pittsburgh health insurance company out of more than $7 million, his attorney said Thursday, ending a years-long federal investigation.

Douglas Henderson, who owned the closed Burrell Chiropractic Clinic in Lower Burrell and Henderson Automotive, is accused of defrauding Highmark Blue Cross/Blue Shield from the mid-1990s through 2002 by submitting fake medical bills, according to a criminal complaint prosecutors filed this week.

Also accused in the scheme is former clinic employee Kendra Huddleston, of New Kensington, Westmoreland County.

U.S. Attorney Mary Beth Buchanan declined to comment. Prosecutors are seeking charges of health care fraud, conspiracy and income tax evasion against Henderson and Huddleston, though neither has been charged yet.

Henderson's attorney, Thomas Ceraso, said Henderson will enter a guilty plea.

"There are three different counts, three different situations," Ceraso said.

Huddleston's attorney, John Ceraso, said he knew the filings were coming, but he hadn't yet seen them. He expects a plea hearing to be scheduled soon and would not say how his client would plead.

Prosecutors accuse the two of submitting fraudulent reimbursement forms to Highmark for chiropractic services that were never performed. Huddleston prepared and submitted the claims at Henderson's direction, the filings state.

The claims were made on behalf of at least six patients who already have pleaded guilty to health care fraud. Most, if not all, agreed to work with prosecutors and testify at trial, if necessary.

The six patients -- Marilyn Marshall, Judith Williamson, Robert Durcho, Eric Ribar, Tina McCurdy and Brandon Burns -- accounted for nearly $1 million of the fake bills submitted to Highmark. They profited more than $220,000 for their cooperation.

Prosecutors have not revealed how the rest of the money was scammed, though they have acknowledged that more patients are known than have been named.

In return for allowing their names to be used as part of the scheme, patients would receive free health insurance coverage through Henderson's car dealership and kickbacks from the false claims, prosecutors claim. The kickbacks -- which ranged from $760 to $3,125 -- were concealed as ordinary business expenses for advertising, cleaning services, office supplies and legal fees, among other things.

Among the payoffs listed in court records was one made to Huddleston in April 2004 for $2,280 as an expense for computer repairs.

In 2000, prosecutors claim Henderson filed income tax papers showing he and his wife had a joint taxable income of $42,722 when in fact their joint taxable income was $798,637.

For the same year, Huddleston claimed a joint income of $14,408 for herself and her husband when $85,888 should have been claimed, according to a criminal complaint.

They each face a maximum of 20 years in prison and a $750,000 fine.

Federal officials began bringing charges in the health care fraud case in early 2004. Henderson's legal troubles began in 2003 when two State Farm insurance companies filed a lawsuit under the federal Racketeer Influenced and Corrupt Organization Act. The lawsuit alleged Henderson and two other men had filed fake or inflated bills for auto accidents.

At the time, Henderson exercised his 5th Amendment right against self-incrimination as he was already a target of the Highmark investigation.

The lawsuit is pending.