New Bern Dr. Convicted: Unlawful Distributing Oxy, Money Laundering, Tax Evasion

NEW BERN, N.C. – A New Bern physician, Dr. Sanjay Kumar, was sentenced today to 240 months in prison for unlawful distribution of oxycodone outside the scope of professional practice and not for a legitimate

medical purpose, concealment money laundering, and income tax evasion.  The Court ordered that Kumar be placed on a three-year term of supervised release at the conclusion of his term of imprisonment.  The Court further order Kumar to pay restitution to the Internal Revenue Service in the amount of $471,758.40 and a criminal fine in the amount of $50,000.

Department of Justice U.S. Attorney’s Office  Eastern District of North Carolina FOR IMMEDIATE RELEASE Tuesday, September 8, 2020

According to court documents and other public information, Dr. Sanjay Kumar, 54, was a physiatrist who operated a small medical office in New Bern, North Carolina, known as “New Bern Medicine and Sports Rehabilitation.”  From 2004 through 2011, Kumar treated chronic pain patients with a wide variety of modalities and interventions, including physical therapy, massage, electrical stimulation (TENS), and non-narcotic prescription medications.  Kumar was adamantly opposed to the use of opioid narcotics for the treatment of chronic pain and rarely prescribed them to his patients during this period, although he acknowledged that if he began prescribing opioid narcotics indiscriminately, he would have a “line out the door” of individuals “willing to pay him $200 to $300 cash” for a 30-day supply.

In the summer of 2011, Kumar’s business was on the brink of financial collapse after Blue Cross Blue Shield—Kumar’s primary source of insurance reimbursements—terminated his provider contract after discovering excessive billing irregularities.  At that point, Kumar began to transition his therapy-based practice into an opioid-based pill mill through which opioid narcotics (primarily oxycodone) were prescribed indiscriminately and indifferently to patients at their first visits, regardless of their etiology and diagnosis, in exchange for $200 cash.  By 2012, Kumar had terminated all of his staff and shifted his hours of operation so that his “clinic” was operating from the late afternoon into the evening.  Kumar’s prescriptions for Schedule II controlled substances (e.g., oxycodone) skyrocketed.  For example, in 2011, Kumar wrote approximately 100 prescriptions for Schedule II controlled substances.  Prior to his arrest, between 2013 and 2016, Kumar was writing thousands of narcotic prescriptions year after year.  During the offense period, Kumar prescribed in excess of 1.2 million oxycodone pills alone.

After complaints were raised by a number of local pharmacies about Kumar’s prescribing patterns, a multi-agency task force, consisting of local, state, and federal law enforcement, was formed in 2014 to conduct an investigation.  Among other things, agents observed patients lining up at Kumar’s office door before he opened for business and then leaving in large groups at the same time. Kumar would often leave at the same time as patients, following them, while others remained back at the office waiting.  A pole camera recording device was installed nearby, only to be obstructed at Kumar’s direction by patients in exchange for “free visits” that concluded with narcotics prescriptions.  At trial, former patients testified that Kumar would accept cash as the only form of payment, each visit costing $200. Every patient received a prescription for oxycodone or controlled substances from Kumar at every visit.  Patients were put on a “monthly maintenance program” requiring them to come back to Kumar for additional refills. The prescriptions were issued regardless of their history of prior medications, prior treatment, and medical diagnoses. During these visits, Kumar was often observed wearing a handgun.

On June 21, 2016, Kumar was arrested and search warrants were executed at both his residence and business. At the time of his arrest, officers recovered a loaded handgun and three full magazines of ammunition from Kumar. He was also in possession of over $145,000 in United States currency. At his house, law enforcement recovered 35 additional firearms, many loaded with high-capacity magazines, and over 40,000 rounds of ammunition.  Investigators also discovered five large duct-taped PVC tubes containing nearly $450,000 in United States currency.

Based on a review of the medical records seized from Kumar’s medical practice, over 97% of the approximately 600 patients who came to Kumar for treatment after June 2011 received a prescription for an opioid narcotic at their first visit. In a typical scenario, the narcotic prescription was given to the patient whether or not they had used or abused opioids in the past, before medical records were obtained or reviewed from prior providers, without the use of a urine drug screen, and without any attempt to provide any alternative forms of treatment.

The financial investigation revealed that in 2013, Kumar stopped keeping financial books and records. Between 2013 and 2016, Kumar made 121 separate cash deposits into a dozen different bank accounts, totaling over $439,000. Kumar would often go to multiple banks, one after another-making deposits, each deposit being less than the required amount to trigger the financial institutions reporting requirement to the United States Department of the Treasury.  In addition to his cash deposits, from 2013 to 2016, Kumar used his ill-gotten gains to spend over $175,000 on four vehicles, $70,000 in purchases from Best Buy, $60,000 on real property, and hundreds of thousands in purchases from Amazon.  Investigation into Kumar’s federal income tax filings revealed that he had filed fraudulent personal and corporate tax returns for his medical practice during the offense period.   Despite having thousands of patient visits per year, during which he charged $200 in cash on average, Kumar reported losses on his returns.

Mr. Higdon commented, “In the summer of 2011 and from that point until now, Dr. Kumar turned his back on the medical profession and on the values of ethics and the principles of human care and decency that govern the behavior of medical professionals.  Put more directly, he moved from being a doctor to being a common, ordinary and dangerous drug trafficker.”

Robert J. Higdon, Jr., U.S. Attorney for the Eastern District of North Carolina made the announcement after sentencing by U.S. District Judge Louise W. Flanagan. The Drug Enforcement Administration’s Tactical Diversion Squad, the Internal Revenue Service-Criminal Investigation (IRS-CI), the New Bern Police Department, the State Bureau of Investigation Diversion and Environmental Crime Unit, and the Craven County Sheriff’s Office investigated the case.  Assistant United States Attorneys Adam F. Hulbig and Nick J. Miller prosecuted the case on behalf of the government.

A copy of this press release is located on our website. Related court documents and information can be found on the website of the U.S. District Court for the Eastern District of North Carolina or on PACER by searching for Case No. 4:17-CR-5-FL.