Ron Halstead and Two Other Chiropractors Convicted in Health Fraud Scheme

Stephen Barrett, M.D.
June 14, 2004

Ronald L. Halstead, D.C. has taught chiropractors how to boost their incomes for more than 20 years. In 1981, when he was still seeing patients, an advertisement for his audiotaped practice-management course stated that in 1980 he had seen 725 to 769 patients per week and had grossed $786,000 but, due to investments and “proper income tax planning,” had paid no income tax for 7 consecutive years [1]. Not long afterward, he was convicted of Medicaid fraud in Illinois. In 1982, he moved to Scottsdale, Arizona, where he set up Practice Systems, a practice-management firm that taught chiropractors throughout the United States how operate high-volume MD/DC practices for rehabilitating injured patients. During the 1990s, ads for his seminars boasted that many of his clients had increased their income by $50,000 per month and that a few were producing over $300,000 per month.

On February 4, 2003, a federal jury in Clarksburg, West Virginia, jury found Halstead and two West Virginia chiropractors guilty of charges relating to a conspiracy to commit mail fraud and health care fraud. Halstead was found guilty on one count of conspiracy, 14 counts of health care fraud, and 11 counts of money laundering; and William C. Filcheck Jr. D.C., and Scott G. Taylor , D.C. were both found guilty of one count of conspiracy and 14 counts of health care fraud. A fourth defendant, Robert B. Burns, Jr., D.C., who owned the clinics in which the fraud took place, has been arrested in Ireland and is fighting to prevent extradition to face the charges [2,3]

The scheme involved the submission of false claims to Medicare and private insurance companies for more than $2.8 million in order to evade payment limitations. According to the indictment:

  • Burns is licensed to practice chiropractic in West Virginia and Pennsylvania. Between 1993 and 1997, he retained Halstead as a consultant.
  • Between 1985 and 1996, Burns owned and operated Mountaineer Chiropractic Center in Morgantown, WV. In 1994, in order to facilitate the fraudulent scheme, he formed Priority One Medical Associates (another clinic) and West Virginia Health Care Management. Filcheck and Taylor were employed by both clinics. Halstead, as a consultant, advised the others about how to carry out the scheme.
  • Priority One was formed as a professional medical corporation, which can only be owned by a licensed medical doctor, not a chiropractor. Between 1994 and 1998, Priority One’s stock was fraudulently held in the name of a medical doctor (“Dr. A”) who was hired by Burns to work at Priority One. In 1995, “Dr. A” retired and was replaced by “Dr. B” as medical doctor at the clinic. However, Burns managed and controlled both clinics through a series of leases and other contractual agreements. .
  • Insurance programs only pay for services that are considered “medically necessary.” Chiropractic services are usually limited to twelve visits per year and generally cover manual manipulation for treating “spinal subluxations.” During the years in which the scheme took place, Medicare did not cover x-ray examinations, other diagnostic tests, or other services performed or ordered by a chiropractor. But it did cover some services by nonphysician personnel that were “incident to medical treatment,” when such services were under the direct supervision of a medical doctor and billed under the doctor’s Provider Identification Number. Two other insurance plans that the clinic billed had no chiropractic coverage, one had a $500 limit, and the fourth had a $1,000 limit.
  • In order to increase reimbursement, services performed or ordered by Burns, Filcheck, or Taylor were fraudulently billed as though they had been performed or ordered by “Dr. A” or “Dr. B,” who had determined that they were medically necessary. The defendants also conspired to send false letters of medical necessity under the doctors’ names without their knowledge.
  • Burns and Halstead caused Priority One employees to engage in marketing efforts that included telemarketing, free dinners, and free initial examinations to individuals with “quality” insurance coverage. The chiropractors used scripts created by Halstead to (a) persuade new patients that they had serious spinal conditions, even if they did not; (b) persuade patients that chiropractic could effectively treat them; and (c) overcome any objections to the type, frequency, length, and cost of the proposed treatment [4]. As an additional inducement, new patients were told that no co-payments would be collected (which is illegal). The clinic staff then followed protocols devised by Halstead to order treatment based on the scope of the patients’ insurance coverage rather than their actual physical conditions and needs.
  • To maximize reimbursement, some services were “upcoded,” some services were billed that had not been rendered, and some services were unbundled (billed as two separate services when only one was performed).
  • To conceal the conspiracy, the clinic staff placed fraudulent documents in patient files, including “case study” and “physician referral” forms which falsely stated that “Dr. A” or “Dr. B” had determined, provided, and supervised the patient’s care when, in fact, services were billed in the medical doctor’s name before the medical doctor had ever seen the patient. Halstead provided software that enabled the others to send false letters of medical necessity in the name of the medical doctor without the medical doctor’s knowledge or consent.
  • Burns and Halstead conspired to transfer funds from the accounts of Priority One and Health Care Management into their personal or company accounts in violation of the money laundering statute [5,6].

In June 2004, Halstead was fined $5,000 and sentenced to 121 months in prison and Filcheck and Taylor were each sentenced to 37 months and ordered to forfeit $1.9 million. Burns’s extradition is still pending.

  1. This DC made nearly $800,000 in 1980. Advertisement for the Halstead Practice Management Course, Digest of Chiropractic Economics, Sept/Oct 1981.
  2. Harvey M. Chiropractors, consultant convicted of health care fraud in fed. Clarksburg Exponent Telegram, Feb 5, 2003. To access this article, go to and paste in the URL$rec=13288cbgCurrentLocalNews?cbgCurrentLocalNews
  3. Barrett S. Patient retention scripts. Chirobase, Feb 16, 2003.
  4. Indictment. United States of America v Robert B. Burns, Jr at al. In the U.S. District Court for the Northern District of West Virginia. Criminal No. 1:01 CR 45, Filed Sept 7, 2001.
  5. Crime Awareness Newsletter. Defense Criminal Investigative Service, March 2002.

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This article was revised on June 14, 2004