Clinic CEO, physician convicted in massive drug trafficking scheme in Kentucky

A federal jury has convicted the president and CEO of a Hazard, Ky.-based medical clinic and her physician husband of more than 150 charges, including illegal distribution of drugs and healthcare fraud.

Lesa Chaney, president and CEO of now-shuttered Ace Clinique of Medicine, and her husband James "Ace" Chaney, MD, allegedly made millions of dollars by unlawfully prescribing large amounts of prescription drugs to patients, according to a KFVS news report.

According to evidence presented during a seven-week trial, Dr. Chaney knowingly provided prescriptions for controlled substances to drug abusers and people who were diverting the pills for sale. He also allegedly pre-signed prescriptions for controlled substances for clinic staff to fill in for patients when he was not present at the clinic and wrote prescriptions for controlled substances to a clinic employee, which he then took himself.

Evidence at trial also showed Dr. Chaney had clinic employees falsify the results of patients' urine drug screens and then submit the altered results to Medicare, Medicaid and private payers for reimbursement. Dr. Chaney and Ace Clinique of Medicine staff billed Medicare for more urine drug screen tests than any other provider or laboratory in Kentucky from 2009 to 2011, according to the report.

Dr. Chaney and his wife billed Medicare and Medicaid nearly $16 million during the scheme, which lasted more than 8 years.

On Tuesday, a jury convicted Dr. Chaney of conspiracy to commit drug trafficking, 62 counts of illegal distribution of controlled substances, conspiracy to commit healthcare fraud, 84 counts of healthcare fraud, two counts of maintaining a premise for drug distribution, conspiracy to commit money laundering and 20 counts of money laundering.

Lesa Chaney was convicted of conspiracy to commit drug trafficking, two counts of maintaining a premise for drug distribution, conspiracy to commit money laundering, 20 counts of money laundering, conspiracy to commit healthcare fraud, and 84 counts of healthcare fraud.

"The defendants in this case combined a massive illegal drug distribution scheme with a massive healthcare fraud scheme," said U.S. Attorney Kerry Harvey's office in a statement issued Tuesday. "The resulting criminal enterprise harmed countless Kentuckians, and sent the fraudulent bill to the American taxpayer."

Dr. Chaney's lawyer, Elizabeth Hughes, told The Lexington Herald Leader the couple will appeal their convictions.

The Chaneys are scheduled to be sentenced August 25.

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