Southeast Texas businessman arrested in fraud scheme

UPDATE: William Hickman's attorney responds.

Two Southeast Texas businessmen, and a doctor out of Silsbee, have been mentioned in a Justice Department complaint against two laboratory CEOs, one hospital CEO and other individuals and entities, alleging False Claims Act violations based on patient referrals in violation of the Anti-Kickback Statute and the Stark Law.

Stephen Kash, of Beaumont, and William Todd Hickman, of Lumberton, the government alleges in a 154-page civil penalty complaint against them and others, were participants in a years-long conspiracy to funnel unnecessary medical procedures through certified rural hospitals that are allowed to bill health insurance providers such as Medicaid and Medicare at premium rates. By contract, all other hospitals are only paid on a designated fee scale determined by the insurance providers.

As outlined in the government’s complaint, “In each of the … kickback schemes, the kickbacks were paid to induce (health care professional) recipients to routinely order large numbers of laboratory tests for screening purposes, regardless of whether any or all of the tests were reasonable and necessary for the patient.”

“The kickbacks had their desired effect,” federal attorneys further allege, as the conspirators allegedly walked away with millions of taxpayer dollars in the process.

According to the United States’ complaint, laboratory executives and employees at True Health Diagnostics LLC (THD) and Boston Heart Diagnostics Corporation (BHD) allegedly conspired with small Texas hospitals, including Rockdale Hospital dba Little River Healthcare, to pay doctors to induce referrals to the hospitals for laboratory testing, which was then performed by the diagnostics groups. The complaint alleges that the hospitals paid a portion of their laboratory profits to recruiters, who in turn kicked back those funds to the referring doctors. The recruiters allegedly set up companies known as management service organizations to make payments to referring doctors that were disguised as investment returns but were actually based on, and offered in exchange for, the doctors’ referrals.

Two recruiters – Southeast Texas’ Hickman and Kash – were allegedly instrumental to much of the conspiracy, serving as middle men to facilitate the scheme.

Hickman furthered the conspiracy by, “among other things, creating, owning, and operating APM, APC, and the Ascend MSO; meeting with at least one (health care professional) about kickbacks from Ascend MSO; depositing purported investment checks (health care professionals) provided to Ascend MSO; authorizing and signing purported distribution checks from Ascend MSO to (health care professionals); (and) authorizing and signing checks and/or bank transfers to himself and (others),” the government complaint alleges.

Hickman was also charged criminally for his involvement in the scheme, arrested and released on an unsecured $50,000 bond for felony allegations of conspiracy to commit illegal remunerations. Jury selection for him and eight others is set for July 18 in Tyler.

Kash is listed in the civil complaint as a close conspirator to Hickman’s role in the scheme by, “among other things, attending in person meetings with potential (health care professionals) referral sources; recruiting (health care professionals) by offering them kickbacks from Quick MSO and/or Ascend MSO; providing information and/or documentation to (health care professionals) about the kickbacks; receiving documentation from (health care professionals); providing and/or coordinating the delivery of checks to (health care professionals); directing personnel to provide supplies and shipping materials to (health care professionals); meeting with personnel about the laboratory referrals; and receiving money, directly or indirectly, as compensation for recruiting (health care professionals) to refer.”

An example offered in the federal filing alleges the Hickman-run BenefitPro recruited Dr. Doyce Cartrett, aka Physician H, of Silsbee, to refer laboratory testing as part of the scheme.

“To induce Physician H’s referrals,” the complaint alleges, “Kash offered to pay kickbacks to Physician H.

“Physician H agreed to participate in the kickback scheme, provided Kash with a purported investment check of $6,000, and began referring laboratory tests for federal health care beneficiaries on or about Sept. 27, 2016.

“Hickman did not deposit Physician H’s check until on or about Nov. 28, 2016. By that date, Physician H had made dozens of referrals for laboratory testing, and Hickman had signed and Kash had provided to Physician H a check dated Nov. 23, 2016, for $15,000 – two and a half times the amount of Physician H’s purported investment.”

During the period of September 2016 to December 2017, Physician H was paid over $234,000 in kickbacks, the complaint further details, “a return of over 3,800% based on Physician H’s purported investment of $6,000.”

In addition to paying the referring health care professionals, Hickman’s BenefitPro also allegedly paid a significant portion of the money to himself and his close connections.

“At Hickman’s direction, BenefitPro transferred over $1.5 million to APM, which paid Hickman’s company, Hickman Tax and Retirement Advisors, $356,699.92 in 2017.

“To hide his role in the kickback scheme, Kash directed BenefitPro to pay him through Tigerlily. From December 2016 to December 2017, BenefitPro paid Kash, through Tigerlily, a total of $671,039.66.”

Other Hickman payees, Christopher Gonzalez and Laura Howard, were forwarded $702,784.61, Howard allegedly recouping her portion of the bounty in bags of cash valued in $10,000 – except at Christmas, when Howard received $70,000 in cash.

“Paying kickbacks to physicians distorts the medical decision-making process, corrupts our health care system and increases the cost of health care funded by the taxpayer,” said local U.S. Attorney Brit Featherston. “Laboratories, marketers and physicians cannot immunize their conduct by attempting to disguise the kickbacks as some sort of investment arrangement. Our office is committed to looking through the disguise and putting an end to any arrangement where the purpose is to improperly influence medical decision making through the payment of kickbacks.”

The United States filed its complaint in a lawsuit originally filed with whistleblower provisions of the False Claims Act, where a private party can file an action on behalf of the United States and receive a portion of the recovery. The act permits the United States to intervene in such lawsuits and add claims and defendants, as it has done here. If a defendant is found liable for violating the act, the United States may recover three times the amount of its losses plus applicable penalties.

Responding directly to this article, Hickman’s legal representative, S. Cass Weiland, Senior Partner at Squire Patton Bogg in Dallas, offered comment on behalf of his client:

“I would ask that you add to your story that the allegations are simply that – allegations.

“Mr. Hickman has a long history of complete compliance with the law and, in this instance, he had extensive legal advice regarding the propriety of his activities. He was shocked by the government’s claims and most of the people in your story were and are still unknown to him.”