Justice Department Recovers Fraudulent Transfer of Proceeds Arising from Kickback Scheme

The Justice Department announced today that it reached a settlement worth over $16 million with Floyd Calhoun Dent, III arising from a health care fraud judgment against Dent as well as fraudulent transfer claims against Dent, certain members of his family, his family trust and several corporations owned or controlled by Dent that received millions in assets that were the proceeds of the fraud.  

Dent, along with two other individuals, was found liable by a South Carolina jury in 2018 for submitting false claims to Medicare and TRICARE, in violation of the Anti-Kickback Statute and the False Claims Act. A judgment was subsequently entered against Dent and the other two individual defendants jointly for $114 million. The judgment was affirmed by the Fourth Circuit Court of Appeals in 2021.

Prior to the judgment, but after Dent’s company, BlueWave Healthcare Consultants Inc., which he owned jointly with co-defendant Brad Johnson, had been served with a Department of Health and Human Services Inspector General subpoena (IG subpoena), Dent transferred tens of millions of dollars in assets, which were the proceeds of his health care fraud scheme, to his spouse, his parents, his in-laws, a family trust and 10 corporations owned and/or operated by Dent. These transfers started within a few months of service of the IG subpoena and continued through 2015. In 2016, the District Court froze 12 parcels of real property that were owned by Dent and his spouse and certain of the Dent corporations.

In 2019, the United States filed an action under the Federal Debt Collection Procedures Act (FDCPA) against Dent and his spouse, the Dent children and the family trust, Dent’s parents and in-laws, the 10 Dent corporations, Dent’s sister, Dent’s long-time friend, two of Dent’s long-term employees and the spouse of one such employee. The 2019 lawsuit sought to recover amounts transferred by Dent to these entities and individuals.  

As part of the settlement announced today, Dent, his spouse and his family, the family trust and the 10 Dent corporations are surrendering nearly all of their assets, which are valued at over $33.6 million, including 22 parcels of real property worth approximately $19 million, $5 million in gold and silver coins, $8 million in cash and $1 million in vehicles, boats, farm equipment and other personal property. The settlement requires the assets be surrendered to the Justice Department and the Liquidating Trustee for now bankrupt Health Diagnostic Laboratories Inc. (HDL), a blood testing laboratory that participated in the health care fraud with Dent and his co-defendants. The HDL Liquidating Trustee will split these assets between the United States and other creditors of HDL pursuant to a bankruptcy court agreement. The United States’ share of the recovered assets is expected to exceed $16 million.

“The payment of kickbacks has the potential to corrupt medical decision-making and to increase the cost of healthcare,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “We will hold accountable those who pay or receive such kickbacks, as well as those who improperly seek to benefit from such violations by receiving the illegal proceeds.”

Previously, in 2022, the United States resolved claims against a long-time friend of Dent and a long-term employee of Dent and the employee’s wife. These claims settled for a combined total of $2.4 million, which was split between the United States and the HDL Liquidating Trustee.

“This recovery demonstrates our commitment to protect our federal health care programs so they can serve the people who need them most,” said U.S. Attorney Adair F. Boroughs for the District of South Carolina.

The settlement announced today resolves the 2018 judgment against Dent in favor of the United States under the False Claims Act. It also resolves the United States’ allegations under the FDCPA that Dent’s transfer to certain family members, family corporations and the family trust were fraudulent transfers.

The settlement was the result of a coordinated effort between the Civil Division’s Fraud and Corporate/Financial Litigation Sections and U.S. Attorney’s Office for the District of South Carolina. Senior Trial Counsel Alicia J. Bentley and Trial Attorney Andrew Warner of the Civil Division and Assistant U.S. Attorneys James Leventis, Johanna Valenzuela and Joanna Stroud and Anne Frate (paralegal) for the District of South Carolina handled the FDCPA matter.

The cases are United States ex rel. Lutz, et al. v. BlueWave Healthcare Consultants, Inc., et al. (D.S.C. Case No. 9:14-cv-00230-RMG) (False Claims Act judgment) and United States v. AROC Enterprises, LLC, et al. (D.S.C. Case No. 9:19-cv-234 RMG) (Federal Debt Collection Procedures action).

The False Claims Act claims against Dent were adjudicated against him and other defendants. The fraudulent transfer claims resolved by the settlement are allegations only and there has been no determination of liability as to those claims.