David Lyle Shehi, Health Care Fraud Conspiracy, Alabama 2018

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David Lyle Shehi, 42, Pleads Guilty to Health Care Fraud Conspiracy

Birmingham, AL – In a shocking turn of events, David Lyle Shehi, 42, of Rainbow City, pleaded guilty to conspiracy to pay kickbacks and commit health care fraud before Chief U.S. District Judge L. Scott Coogler yesterday. This guilty plea is the latest in a series of cases involving multi-million-dollar health care fraud and kickback conspiracies.

According to the information and plea agreement, Shehi owned a pain management clinic in Rainbow City called Etowah Pain. Between 2016 and 2018, Shehi conspired with others to commit health care fraud, and to receive kickbacks in exchange for his medical practice’s ordering items or services that would be billed to Medicare and other health insurance programs.

One of those services was electro-diagnostic testing provided by a Huntsville-based company called QBR, or Diagnostic Referral Community. According to the plea agreement, QBR paid Shehi, through the medical practice, a per-patient fee for tests ordered from QBR and reimbursed by insurance. The payments were disguised as hourly payments for the ordering physician’s time and staff’s time, but in reality, Shehi’s practice was paid on a per-patient basis.

This week, a defendant in a related case was sentenced. Today, Judge Coogler sentenced Dr. Eric Beck, 64, of Huntsville, to 15 months in prison. Beck pleaded guilty last year to health care fraud conspiracy for his role in the QBR scheme.

The cases against Shehi, Beck, and others are related to several other cases that have resulted in convictions. John Hornbuckle, 53, of Huntsville, pleaded guilty to health care fraud and kickback conspiracy offenses for his role, as QBR’s CEO, in orchestrating the fraud. James Ewing Ray, 52, of Gadsden, pleaded guilty to health care fraud and kickback conspiracy for his role as a sales rep who marketed QBR’s scheme to Shehi and other medical practices and received kickbacks per test ordered.

In March 2022, a jury convicted Dr. Mark Murphy, 66, and his wife Jennifer Murphy, 66, both of Lewisburg, Tennessee, of drug distribution, fraud, and kickback crimes. The Murphys operated North Alabama Pain Services, which closed its Decatur and Madison offices in early 2017. According to court documents and evidence presented at trial, the Murphys took kickbacks from QBR of more than a million dollars.

The maximum penalty for conspiracy to commit health care fraud and receive kickbacks is five years in prison. The FBI and HHS-OIG investigated the case. Assistant U.S. Attorneys J.B. Ward and Don Long are prosecuting the case.