James Ewing Ray, Health Care Fraud Conspiracy, Alabama 2023

U.S. District Court Judge L. Scott Coogler handed down a 40-month sentence to James Ewing Ray, a 53-year-old medical sales representative from Gadsden, for his role in a multi-million-dollar health care fraud conspiracy. Ray was also ordered to forfeit more than $850,000 and pay restitution to victims of over $5.3 million.

Between 2012 and 2018, Ray conspired to pay and receive kickbacks from medical providers to induce them to issue medically unnecessary prescriptions and order medically unnecessary goods and services. These services included nerve conduction testing provided by a Huntsville-based electro-diagnostic testing company called QBR or Diagnostic Referral Community.

Ray received per-patient kickbacks from QBR for inducing medical providers to order tests from the company. The medical providers also received kickbacks from QBR, disguised as hourly payments for the ordering physician’s time and staff’s time, but in reality, these payments were for every patient who received a test.

Ray’s actions resulted in the submission of false claims to Medicare and other health insurance programs, causing millions of dollars in losses. The FBI and HHS-OIG investigated the case, with Assistant U.S. Attorneys J.B. Ward and Don Long prosecuting.

Ray’s case is part of a larger investigation into health care fraud in the state of Alabama. In a related case, Judge Coogler also sentenced David Lyle Shehi, a 43-year-old pain clinic owner from Rainbow City, to 28 months for his role in the health care fraud conspiracy.

Shehi, who owned Etowah Pain, a pain clinic in Rainbow City, was paid kickbacks in exchange for his practice’s ordering nerve conduction tests from QBR. He also caused his practice to routinely bill health insurance programs for patient office visits using a code that would generate the highest reimbursement, despite being warned that this was not allowed.

The sentencing of Ray and Shehi marks a significant victory in the fight against health care fraud in Alabama. The U.S. Attorney’s Office and law enforcement agencies will continue to work together to investigate and prosecute those who engage in these crimes.

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