TMCnet News
Lower Burrell master of fraud took millions(The Pittsburgh Tribune-Review Via Acquire Media NewsEdge) Dec. 14--Dr. Douglas Henderson once lived a life that others might envy. Friends say the sharply dressed chiropractor drove expensive cars -- at various times a Mercedes, a BMW, a Corvette, a Jaguar -- played golf at Hill Crest Country Club in Lower Burrell and spent weekends at his rural camp in Emlenton. His practice, the Burrell Chiropractic Clinic, boomed with patients who praised his work and recommended him to others. Former associates say he was respected in the community and known for generous donations to youth sports teams and Make-A-Wish Foundation. "He'd do anything for anybody. He's a helluva nice guy and one of the best chiropractors around," said Dr. Peter Mudar, of Lower Burrell, a chiropractor and former clinic employee. But Henderson's once-charmed life has lost its luster. Records show he is broke, suffering from debilitating multiple sclerosis and headed to prison for masterminding a crime investigators say is the largest federal health insurance fraud case ever prosecuted in Western Pennsylvania. His sentencing, postponed 10 times, is scheduled for Dec. 19 before U.S. District Judge Gary Lancaster. Investigators said Henderson devised a complex scheme that involved 31 conspirators and insurance billings in excess of $21 million. In 2006, he entered guilty pleas to charges of health care fraud, conspiracy and income tax evasion, admitting that he alone defrauded Highmark Blue Cross Blue Shield of more than $7 million by submitting thousands of fake medical bills for reimbursement from 1996 to 2002. Records showed that Henderson and his wife, Kristin, a registered nurse who was not charged, filed a joint 2000 tax return that listed their income as $42,722, far below their income of $798,637. The couple reported a tax liability of $26,751, but owed $330,422. Henderson, who likely faces seven years behind bars, based on a plea agreement, declined to discuss the case on the advice of his attorney, Thomas R. Ceraso. However, he said he worries that prison "would be very detrimental" to his physical condition. "I've been managing with multiple sclerosis since 1994. Stress is not good for it, so you can imagine that this situation hasn't been helpful," he said. THE SCHEME Thomas P. Brennan Jr., Highmark's director of special investigations, said prosecutors decided to charge Henderson and 15 others from among the 32 people involved in the scheme based on evidence gathered during a six-year investigation. Charges resulted from insurance billings between Jan. 25, 2002, and Jan. 1, 2005, he said, explaining that earlier years were excluded because of statutory time limits. During that period, Henderson billed Highmark for $21,409,214.02 and was paid $11,264,854.05, Brennan said. Although some bills were legitimate requests for reimbursement for patient care, Brennan said Henderson helped himself to millions by cheating the insurer in a complicated swindle motivated solely by greed. "The bottom line was money," Brennan said. Henderson -- who at one time operated Henderson Automotive and held interests in at least four other businesses -- enlisted employees, friends and cooperative patients to help him commit the crimes that involved thousands of transactions, according to U.S. Attorney Mary Beth Buchanan. Along the way, he left a considerable paper trail. U.S. Attorney James Garrett told the court that Henderson submitted fake bills to Highmark for numerous chiropractic services that were not performed on patients who cooperated in the crime. In return, he gave them free health insurance coverage by claiming they were employees covered by his auto dealership's group plan. He gave them cash, records show. Brennan said Henderson's office employee, Kendra Huddleston, handled billing and recruited patients by offering them financial kickbacks as high as $70,000. Huddleston, 45, of Littleton, N.C., pled guilty to fraud, conspiracy and income tax evasion and is awaiting sentencing in January. The remaining defendants entered guilty pleas to health care fraud. In addition to Henderson and Huddleston, four await sentencing. Nine were placed on probation. Phillip Swartzlander, 50, of New Kensington was sentenced to five months in prison followed by probation. Case records offer no explanation as to why he was singled out for more severe punishment. Swartzlander, who is serving time in a halfway house while working for an auto dealership, regrets his actions. "I get out to go to work and that's it. You can't even imagine what it cost me," Swartzlander said. Brennan said Mudar and two other chiropractors -- Dr. Alec Cirigliano, 38, and Dr. Raymond W. Bitar Jr., 39, both of Lower Burrell -- were questioned but not charged because they cooperated with the government. "When we interviewed them, the doctors helped us. It was a matter of who wanted to get the best seat on the bus," Brennan said. Mudar described the clinic as very busy. He said the four doctors combined often treated 200 to 300 people a day at the practice that employed 10 massage therapists, three assistants for each doctor and a dozen clerical workers. All bills, he said, were submitted to insurance companies under Henderson's name. "We were so busy that it got to the point that you didn't know who you were seeing. Did I know all that stuff was going on? I heard rumors, but I had no proof," Mudar said. "Do I feel used now? Yeah." The trio left Henderson's practice amid the turmoil of the investigation. Today, Mudar is a sole practitioner; Cirigliano and Bitar are partners. In 2003, State Farm Mutual Automobile Insurance Co. sued Henderson, Cirigliano and Bitar in federal court under the Racketeer Influenced and Corrupt Organizations Act for claims submitted for patient care. Henderson was ordered to pay the insurer $200,000. Cirigliano and Bitar emerged unscathed. "Obviously, we do not maintain a relationship with him," Cirigliano said about Henderson. "I don't think he's a bad person, but I don't agree with what he did." Bitar did not respond to requests for comment. THE MAN People who know Henderson say he is likable, friendly and a hard worker despite poor health, personal losses and financial problems that include a 2004 bankruptcy. The son of the late Vaudyne and William Henderson, he grew up in Monroeville and graduated from Gateway High School. In 1985, he earned a medical degree at Palmer Chiropractic College in Davenport, Iowa. He held a chiropractor's license in Pennsylvania from 1987 until he voluntarily surrendered it Sept. 1, 2004. He was licensed to sell vehicles from 1992 to 1999 and held a dealer's license from 1996 to 1999, records show. After a brief first marriage that ended in June 1988, Henderson in 1990 married the former Linda Carol Hall, with whom he had two children. Records show that by the time Henderson filed for divorce in January 1996, they had amassed assets that included seven vehicles and homes in Murrysville, Monroeville and O'Hara. In their divorce settlement, Henderson agreed to pay Hall $225,000 from the sale of their $1.7 million Murrysville home, $558,000 for her share of his businesses, $170,000 from his clinic profit-sharing account and $4,500 per month in child support. Henderson made timely payments for several years but fell behind in 2001, according to Hall, who said he owes thousands in back support. She said she receives half of his monthly Social Security disability check. Henderson, who cannot work because of his disability, said he has lost his home, businesses and all of his assets. He admits he is broke. "I don't have anything left," he said. In October 1998, five days after his second marriage ended, Henderson married his third wife, the former Kristin Hydock of Lower Burrell, with whom he has two children. His best man was his brother, Dr. William Henderson, a Murrysville chiropractor who died in 2004. At the time of William Henderson's death, he too, was under investigation, Brennan said. Brennan explained that Highmark uses "pretty sophisticated analytical tools" that flagged billing irregularities at the brothers' practices. Investigators placed their clinics under surveillance, interviewed patients and reviewed medical records. "It was obvious they were fraudulent, so we referred it to law enforcement," Brennan said. Now, the case appears headed for the region's federal court record books. "I don't believe there are any larger than that," Brennan said. GUILTY PLEAS Federal prosecutors charged 15 additional defendants in a landmark case masterminded by Lower Burrell chiropractor Dr. Douglas Henderson. The following pleaded guilty to health care fraud: --Robert Bates, 56, of Lower Burrell was sentenced to serve three years' probation, including 10 months of home detention. He cooperated with Henderson to submit more than $152,600 in false claims, for which he was paid $19,500. --Brandon E. Burns, 31, of Murrysville was placed on probation for three years and ordered to pay restitution of $64,000 for false claims submitted in his name. He received about $17,000 for his participation. --Robert Durcho, 51, Tarentum was sentenced to three years' probation and ordered to make restitution for 147,000 in false claims. He was paid about $51,000 in the scam. --Marilyn Marshall, 56, Murrysville was placed on probation for three years and ordered to make $140,000 in restitution. She received around $58,000 from Henderson for her cooperation. --Tina McCurdy, 42, of North Huntingdon was sentenced to three years' probation and ordered to pay $242,000 in restitution for her role in the scheme that paid her $73,992 in kickbacks. --Eric Ribar, 37, of Apollo must serve three years' probation and pay $146,577 in restitution for claims submitted in his name. He received $49,230, prosecutors said. --John Slimick, 49, of New Eagle in Washington County was placed on probation for three years and ordered to serve six months on house arrest. He must pay $156,000 in restitution for claims filed by Henderson, who paid him about $20,000. --Phillip Swartzlander, 50, of New Kensington was sentenced to five months in prison followed by probation. He must make restitution totaling $138,000 for cooperating with Henderson, who paid him $30,000. --Judith Williamson, 50, of Pittsburgh's South Side was placed on probation for three years and ordered to repay Highmark $316,611 for claims submitted in her name by Henderson, who paid her $46,500. --Heather Layhew, 35, of Rural Valley in Armstrong County, and John Layhew, 40, of Lower Burrell will be sentenced Jan. 9. They admitted helping Henderson to obtain $210,000, for which they received $47,000. --Linda McClafferty, 59, and William McClafferty, 54, of Allegheny Township will be sentenced Jan. 9. The couple said they helped Henderson to collect about $415,000, for which they received about $41,000. --Susie Horning, 56, of Leechburg will be sentenced Jan. 23 for $250,000 in claims submitted in her name. Prosecutors said she received kickbacks of a least $26,000 and free use of a New Kensington residence. --Kendra Huddleston, 45, of Littleton, N.C., will be sentenced Jan. 23 on guilty pleas to health care fraud, conspiracy and income tax evasion for submitting numerous fake medical bills to Highmark and filing a fraudulent tax return for 2000. To see more of The Pittsburgh Tribune-Review or to subscribe to the newspaper, go to http://www.pittsburghlive.com/x/pittsburghtrib/. Copyright (c) 2008, The Pittsburgh Tribune-Review Distributed by McClatchy-Tribune Information Services. For reprints, email [email protected], call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA. |