Monday, October 14, 2013

Late Mountain Home Doctor May Have Crafted Largest Medicare Fraud in State's History: $14.7M

If Dr. Stacey M. Johnson of Mountain Home had not died earlier this year at 63, he likely 
would have been charged with overbilling Medicare by $14.7 million, according to a criminal 
investigator’s affidavit that was recently made public.
Johnson’s medical career ended in 2009 when the Arkansas State Medical Board pulled his
 license for recklessly running too many tests on patients. Now the U.S. Attorney’s Office for
 the Western District of Arkansas is in the process of recovering money from what may be the
 largest Medicare fraud in the state’s history.
On Sept. 20, the U.S. Attorney’s Office filed a civil forfeiture lawsuit in an attempt to seize 
Johnson’s ex-wife’s Mountain Home mansion, which prosecutors said was paid for with 
proceeds from the Medicare fraud. Johnson’s ex-wife, Cynthia Johnson, paid $600,000 to 
settle the lawsuit and keep the property. The case was closed Oct. 4.
Cynthia Johnson told Arkansas Business last week that she had been given immunity from
 criminal prosecution and was scheduled to meet with federal investigators on Oct. 10.
She said she didn’t believe her former husband committed Medicare fraud.
“I worked in the office for 28 years with him, and he did not overbill Medicare,” she said. 
“He didn’t even pay attention to what was being billed. He was simply the physician and he 
did what he felt was right for the patients.”
Others disagree.
Conner Eldridge, U.S. attorney for the Western District of Arkansas, told Arkansas Business
last week that recovering more assets is “an ongoing effort.”
“We are serious about trying to do all we can to locate those funds or assets,” he said. “There 
are a number of assets that we’re taking a look at.”
He wouldn’t say whether anyone would be charged. “It’s an ongoing investigation,” he said.
Dr. Johnson was allowed to continue practicing despite signs and allegations of over-testing 
dating back for years.
“It’s a serious Medicare fraud case,” said Eldridge, who was appointed U.S. attorney at the
end of 2010. “So when you look at the amounts of overbilling and the amounts of money that
was sought and obtained for Medicare for tests that were not medically necessary, it’s pretty 
While fraud against government insurance programs can come at any level, the fraud that is
prosecuted tends to be by providers rather than beneficiaries. For instance, of the seven cases
of fraud against Medicaid, the joint federal and state insurance program for the poor, that
Arkansas Attorney General Dustin McDaniel has announced since May, only one alleges fraud
by a beneficiary.
‘Lifelong Dream’
Born Oct. 20, 1949, in Alma, Ga., Stacey Johnson’s “lifelong dream was to become a physician,” 
according to the obituary posted online by Roller Funeral Home in Mountain Home.
After receiving his medical degree from Tulane University in New Orleans in 1975, Johnson 
completed a residency program in internal medicine and then a fellowship in cardiology in
Dallas. Stacey and Cynthia Johnson met in Texas and were married in 1976. After he 
completed his training, they started looking for a place to practice. He wanted to live in a 
small town and she wanted to live on a lake. They found the right combination in Mountain 
Home, Cynthia Johnson said.
In 1980, Dr. Johnson started his private practice in internal medicine and cardiology and 
opened the Physicians’ Medical Center of the Ozarks in 1982.
The first signs of trouble surfaced between 1985 and 1990, when Dr. Johnson was counseled 
by Medicare “for conducting excessive tests on patients,” Cynthia Johnson told investigators 
in 2010, according to an affidavit filed in the forfeiture case by Thomas Kowalski, a special 
agent with the Department of Defense’s Office of Inspector General.
She told Arkansas Business that questions about over-testing dogged Dr. Johnson for years.
“There were times when I would say to him, ‘Stacey, can you just not order quite so many 
follow-up tests,’” Cynthia Johnson said last week. “And he would look at me and say, ‘Are 
you the doctor?’”
She said he didn’t order the tests for the money. Instead, Cynthia Johnson told Kowalski in 
2010, Dr. Johnson had an undiagnosed disorder that caused him to attempt to find anything
that could be wrong with a patient.
The early 1990s was a rough time for Dr. Johnson. The first of what would be more than two 
dozen complaints involving over-testing was filed against him at the state Medical Board, 
though no action was taken against him for many years.
He also struggled with alcoholism. In 1991, he spent four to five months in an alcohol and drug rehabilitation program. (Johnson revealed the treatment in a statement filed with the Medical 
Board, but it is unclear whether he was forced into the program or went voluntarily.)
Doctors’ Concerns
Cynthia Johnson told Arkansas Business that other cardiologists who worked for the hospital
 in Mountain Home, Baxter Regional Medical Center, didn’t like her husband because he was 
She said that in the early 2000s, the doctors tried to have his privileges revoked at the 
hospital and conducted a scathing review of his work.
In 2003, Cynthia Johnson hired Dr. J. David Talley of Paducah, Ky., to review Dr. Johnson’s 
files that the other hospital doctors had inspected. Talley’s report, which Cynthia Johnson 
provided to Arkansas Business, found no fault with Dr. Johnson’s work.
“It appears that Dr. Johnson is a caring cardiologist who pays attention to patients’ symptoms 
and wants to make a diagnosis and an appropriate treatment plan,” Talley wrote. “I personally
find this refreshing.”
A Baxter Regional Medical Center spokeswoman said last week that Johnson was a member
of the hospital’s medical staff in good standing until he lost his license in 2009.
In 2003, Dr. Johnson decided to expand his medical office to include a blood lab, nuclear 
cardiology, imaging and outpatient surgery.
“I was aiming for better care for my patients in an environment that I could have more 
control,” he wrote in a 2011 application to recover his medical license. “I wanted to break 
even and make a living, but we gave out a lot of free care.”
The 19,000-SF, three-story building opened in 2004 and cost about $11 million. The building 
was attached by a covered walkway to his medical clinic. He also used the third floor of the 
building as an apartment. The expansion helped Johnson’s billings balloon from $2.6 million in 
2003 to $8.6 million in 2006. But the increased billing raised red flags.
An ‘Aberrant’ Biller
In 2006, in an attempt to root out fraud, the Centers for Medicare & Medicaid Services hired 
AdvanceMed Corp. to analyze Medicare billings by providers in Arkansas, Louisiana and 
Oklahoma for 2003-05.
The analysis ranked Johnson as the most “aberrant” biller among cardiologists in Arkansas. 
That sparked a full investigation, which was launched on July 25, 2006.
AdvanceMed’s year-long review found problems with more than 90 percent of his billing.
It said Johnson performed 115 unnecessary heart catheterizations between 2004 and 
June 30, 2006. Nearly 80 percent of the 822 claims he submitted during that period were
denied because the documentation didn’t support the medical need for the procedure billed.
AdvanceMed wasn’t alone in its analysis. In 2007, Pinnacle Business Solutions Inc., which is 
contracted by CMS to pay Medicare claims, became alarmed by Dr. Johnson’s claims, finding 
that between April and September 2006, he was the No. 1 biller in the country for two 
procedures involving catheter placements.
Those findings were forwarded to the Office of the Inspector General for the U.S. Department 
of Health & Human Services, which started an investigation in August 2008 and found even 
more questionable billings, Kowalski’s affidavit said. After looking at the periods between 
Jan. 1, 2004, and June 30, 2006, and Jan. 1, 2007, through June 26, 2009, “an established 
Medicare overpayment to Johnson was calculated as” $14.7 million, Kowalski’s affidavit said.
A U.S. attorney — Kowalski’s affidavit didn’t say which one — hired Dr. Maan Jokhadar of 
Atlanta to look over the medical records of six of Johnson’s patients.
Jokhadar found “Dr. Johnson’s documentation was voluminous, repetitious and overall poor 
in quality,” Kowalski wrote. “Documentation focused on patients’ social and family situations, 
and rarely elaborated on symptoms or complaints presented by the patients.”
Jokhadar also found that Johnson ordered a number of tests that weren’t medically 
necessary, while other tests were just duplicates of previous tests.
Meanwhile, patient complaints were stacking up against Johnson at the state Medical Board. 
And his marriage to Cynthia was falling apart. She told Arkansas Business that he left her for 
a younger woman. He fired Cynthia from her job at his practice and filed for divorce on the 
same day, Jan. 13, 2009.
‘Potentially Dangerous’
On March 31, 2009, Principal Life Insurance Co. of Des Moines, Iowa, which had policyholders 
who were treated by Johnson, filed a complaint with the Arkansas State Medical Board. It said 
Dr. Johnson’s “excessive testing both invasive and noninvasive is not within the standard of 
care and potentially dangerous to the patient.”It also said that after reviewing 10 medical records of Johnson’s patients, it “identified, what we feel, are serious concerns regarding the outcome of those reviews.”
The concerns were that the tests performed “are far in excess of what is justified by the patient’s problems,” the letter said. And many of the tests posed “significant unnecessary risks to the
patients,” the letter said.
In 2009, the Medical Board had other doctors review Johnson’s patient files. What they found 
troubled them. Dr. Donald Meacham of Little Rock told the board that a 39-year-old patient had 92 
tests, of which only six were appropriate.
“I believe this does rise to the level of gross negligence or ignorant malpractice,” Meacham wrote.
The board found that Johnson’s behavior “is a danger to the public health, safety, and welfare” 
and issued an emergency order of suspension on Aug. 17, 2009. He would try but would never 
get his license back.
‘I Greatly Miss Medicine’
While investigators continued to look into Johnson’s overbilling, he was devastated by the loss 
of his practice.
“I greatly miss Medicine,” Johnson wrote in an April 2012 letter to Dr. Bob Cogburn of 
Mountain Home, a member of the Medical Board. “Medicine is the only thing I know how to do. … 
I hate to see 13 years [of] training and 29 years [of] experience go down the drain.”
Apparently, the more than $8 million Johnson received in the form of salary, dividends and other 
income between April 1999 and January 2009 was gone.
In his letter to Cogburn, Johnson blamed his financial troubles on his ex-wife, who he said 
used his money “to build her ostentatious lake house, and left me and my Practice in heavy
debt. I will soon need to go on public relief or get a job at McDonalds; is this something you 
want to see happen to a fellow physician?”Cynthia Johnson said that after he lost his license, 
her ex-husband didn’t take care of himself, smoking and eating too much.And investigators 
were closing in.
Federal agents were pursuing criminal charges for wire and health care fraud and a civil 
forfeiture of assets, Special Agent Kowalski said in his affidavit.One person close to the case 
who asked not to be named said a federal grand jury had been called and Dr. Johnson 
was likely to be indicted.
But that didn’t happen. On March 5, he died of natural causes.