Ashland Cardiologist Richard E. Paulus Convicted of Health Care Fraud

Richard E. Paulus, a cardiologist from Ashland, Ky., was convicted Thursday by a federal jury on charges of health care fraud and making false statements related to health care matters. After a grueling seven-week trial in Covington, Ky., the verdict brought down the hammer on a scheme that exploited vulnerable patients and bilked Medicare, Medicaid, and private insurers for medically unnecessary heart procedures performed between 2008 and 2013.

Prosecutors laid out a damning case: Paulus routinely falsified patient records to exaggerate arterial blockages, making it appear that invasive procedures like coronary stent placements and diagnostic catheterizations were justified. In reality, over seventy patients received stents despite having blockages far below the 70 percent threshold required for medical necessity—some with barely any obstruction at all. Paulus altered records to show blockages at or near 70 percent, ensuring reimbursement from insurers that only pay for legitimate, life-saving interventions.

At King’s Daughters Medical Center, where Paulus practiced during the height of his fraudulent activity, the fallout is still reverberating. From 2006 to 2012, Paulus billed Medicare for more heart procedures than any other cardiologist in Kentucky and ranked fifth nationally in Medicare payments for stent procedures. His aggressive billing drew red flags for years, culminating in a 2014 civil settlement in which the hospital paid $40.9 million to resolve allegations of falsely billing federal health care programs for unnecessary cardiac interventions.

Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky, slammed Paulus’s actions as a betrayal of public trust. “All of us rely on our healthcare providers to make treatment decisions based solely on medical considerations, untainted by financial considerations,” Harvey stated. “The jury determined that Dr. Paulus dishonored this fundamental duty to many of his patients in order to defraud federal healthcare programs. This is entirely unacceptable conduct, particularly in relation to invasive medical procedures, and justice has been served in this case.”

The investigation was a multi-agency effort led by the FBI, the U.S. Department of Health and Human Services Office of Inspector General, and the Kentucky Office of Attorney General-Medicaid Fraud and Abuse Control Unit. Ten cardiologists testified for the prosecution, reinforcing the medical consensus that Paulus’s procedures were unjustifiable under standard care protocols. Assistant U.S. Attorneys Andrew Sparks and Kate Smith led the prosecution, which marks a major victory in a probe that spanned nearly a decade.

Paulus now faces a maximum of 20 years in prison for health care fraud and up to five additional years for making false statements. Sentencing is scheduled for April 25, 2017. The case was jointly announced by Kerry B. Harvey, Jennifer Moore (Acting Special Agent in Charge, FBI), Derrick Jackson (Special Agent in Charge, HHS-OIG), and Andy Beshear, Kentucky Attorney General. With patient safety and taxpayer dollars on the line, the verdict sends a clear message: even in white coats, no one is above the law.