Feds indict black lung association president on fraud charges

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Sunday, May 22, 2005

PIKEVILLE, Ky. -- The U.S. Department of Health and Human services indicted the president of the Kentucky Black Lung Association last week, alleging she helped concoct a scheme that fraudulently billed Medicare for home respiratory therapy services.

The indictment alleges the Black Lung Association sent coal miners to Dr. Raghu Sundaram for medical examinations. Sundaram would send the miners to J and J Medical, a Pikeville medical supply store owned by Otis Davis and secretly co-owned and controlled by Carolyn Sue Davis, for oxygen. Sundaram often signed blank prescriptions. Association president Carolyn Sue Davis later completed the prescriptions with false information, according to the indictment.

The indictment alleges that "In order to maintain a steady stream of miners who were eligible for Medicare benefits, Carolyn Sue Davis recruited, or caused to be recruited, coal miners to join the KBLA. Miners were encouraged to join the KBLA on the pretext that it was dedicated to help them obtain federal and state black lung benefits," the Appalachian News Express reported.

"As a result, J and J Medical supplied nearly all of the oxygen needs of KBLA members," the indictment said.

Davis, 57, was charged along with her husband, Otis Davis, 72, a director of the association, with fraud and obstruction of a health care investigation.

Sundaram was also charged with Medicare fraud in the case.

The indictment alleges the three operated the scheme from January 1999 to August 2003.

"In order to maintain a steady stream of miners who were eligible for Medicare benefits, Carolyn Sue Davis recruited, or caused to be recruited, coal miners to join the KBLA," according to the indictment. "Miners were encouraged to join the KBLA on the pretext that it was dedicated to help them obtain federal and state black lung benefits."

If convicted, the three could be sentenced to up to 10 years in prison and fined up to $250,000.

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