DOJ Reaches $1.7 Million Settlement with Former Indiana Physician Over Medicaid Fraud

A former Indiana physician has agreed to pay $1.7 million to settle allegations that he submitted thousands of fraudulent claims to the Indiana Medicaid program, according to U.S. Department of Justice officials.

Don Wagoner, who previously operated Wagoner Medical Center LLC in Burlington, was accused of filing more than 5,000 false Medicaid claims that resulted in nearly $1 million in improper payments. The settlement, announced by the U.S. Attorney’s Office for the Northern District of Indiana, resolves civil claims brought under the False Claims Act.

According to court records, the fraud scheme centered on urine drug testing performed on patients who sought opioid or pain medication prescriptions. While patients consented to provide urine samples for drug screening, investigators found that Wagoner conducted only a single test using a multiplex screening kit but billed Medicaid as if multiple separate tests had been performed.

Prosecutors revealed that Wagoner routinely billed Indiana Medicaid for nine or more individual drug screenings per patient when in reality only one comprehensive test was administered. This billing practice generated reimbursements of approximately $171 per patient—far exceeding Medicaid’s allowable rate of $20.83 per test.

“The scheme was deliberately concealed by falsely certifying that multiple samples had been separately collected and analyzed when only one sample was tested,” a Justice Department spokesperson explained. “This type of systematic overbilling drains critical resources from public healthcare programs intended to serve vulnerable populations.”

The case against Wagoner began to unfold years before the civil complaint was filed. Prior to the December 2017 civil action by the United States and the State of Indiana, Wagoner had already surrendered his medical and prescribing licenses and was convicted on felony drug dealing charges in a related criminal case.

The investigation into the Wagoner Medical Center was part of a broader crackdown that resulted in more than 95 charges against Wagoner and his associates. Court records indicate that Wagoner’s wife was also indicted, though she was later deemed unfit to stand trial due to cognitive decline.

This settlement highlights ongoing federal efforts to combat healthcare fraud, particularly in opioid-related practices. In recent years, federal authorities have intensified scrutiny of medical practices that prescribe pain medications, with drug testing procedures becoming a focus area for potential fraud.

“Healthcare fraud schemes like this one not only steal from taxpayers but potentially compromise patient care,” said a healthcare fraud expert familiar with similar cases. “Urine drug testing is an essential component of responsible prescribing, especially for controlled substances, but it has unfortunately become a lucrative target for fraud.”

The $1.7 million settlement exceeds the original improper payments, reflecting the government’s authority under the False Claims Act to seek treble damages and additional penalties for fraudulent billing.

Federal prosecutors emphasized that the settlement ensures Wagoner does not retain money obtained through fraudulent Medicaid billing and reaffirmed their commitment to recovering improperly paid public healthcare funds.

“This settlement demonstrates our office’s dedication to protecting the integrity of government healthcare programs and ensuring that providers who attempt to defraud these systems are held accountable,” noted a representative from the U.S. Attorney’s Office.

The case represents part of a nationwide effort by the Department of Justice to combat healthcare fraud. According to federal statistics, healthcare fraud investigations have recovered billions of dollars in recent years, with a significant portion coming from cases involving improper laboratory billing practices.