Audio: Former CEO at Putnam County Memorial Hospital Pleads Guilty to $114 million billing scheme

Putnam County Hospital 2019

A former executive of a northern Missouri hospital pleaded guilty in federal court in Florida to a $114 million pass-through billing scheme.

The Justice Department in Washington says former Putnam County Memorial Hospital chief executive officer David Lane Byrns pleaded guilty to a one-count information charging him with conspiracy to commit health care fraud. Byrns pleaded guilty before U.S. Magistrate Judge James Klindt, of the Middle District of Florida.



The criminal count was originally filed in Missouri and was transferred to Florida, where Byrns now lives. The complex case was investigated by the FBI in Kansas City, Jefferson City and in Jacksonville, Florida. The Justice Department in Washington has been involved, as has the U.S. Department of Labor and the offices of two Missouri statewide officials.

According to admissions made as part of his guilty plea, in 2016, Byrns and another individual took control of Putnam, a rural hospital in Missouri, through a management agreement with the hospital’s board, and Byrns was installed as the hospital’s CEO.  Byrns and others, including a laboratory owner, then arranged for urine drug tests (UDTs) and blood tests to be performed on a massive scale at diagnostic testing laboratories outside Missouri, on behalf of individuals who were not Putnam patients and who otherwise had no connection to Putnam.  To obtain samples for testing, Byrns and his co-conspirators entered into arrangements with marketers, who solicited samples from substance abuse treatment centers, sober living homes, physicians’ offices and other sources throughout the United States, in exchange for a portion of the insurance reimbursements.  Many of the tests conducted were medically unnecessary.  Byrns and his co-conspirators billed the tests to private insurers and to the Missouri Medicaid program using Putnam’s billing credentials, in order to take advantage of Putnam’s favorable reimbursement rates under its in-network contracts with the insurers, while failing to identify the fact that most testing had not taken place at Putnam, Byrns admitted.

During a 15-month period, Byrns and his co-conspirators caused private insurers and the Missouri Medicaid Program to reimburse Putnam approximately $114 million for the laboratory tests, most of which was shared among Byrns and his co-conspirators, including the laboratories, marketers and billing companies involved in the scheme, Byrns admitted.

The Medicaid program is health care for low-income residents. Unionville is in far north-central Missouri, just south of the Iowa border.

Federal prosecutors in Missouri and Florida say billing companies and labs were also involved in the scheme, describing them as “co-conspirators.”

Missouri Auditor Nicole Galloway’s (D) scathing 2017 audit of Putnam County Memorial Hospital uncovered $90 million in inappropriate lab billings and prompted calls for the federal investigation.

The Justice Department is acknowledging Galloway’s office for assistance, along with Missouri Attorney General Eric Schmitt’s (R) Medicaid Fraud Control Unit.