The Advanced Pain Management lawsuit was a federal False Claims Act case brought by whistleblower Gina Hedstrom in 2013 against the Wisconsin-based pain treatment network, which resolved in October 2020 when APM agreed to pay $1 million to settle allegations of illegal kickbacks to referring physicians and medically unnecessary urine drug testing.1U.S. Department of Justice. Wisconsin Pain Management Companies Settle False Claims Act Allegations The company did not admit liability. Around the same time, APM collapsed into receivership and closed every one of its clinics and ambulatory surgical centers.
What the Lawsuit Alleged
Hedstrom filed her qui tam complaint under seal in the U.S. District Court for the Eastern District of Wisconsin.2CourtListener. Hedstrom v. Advanced Pain Management SC The government investigated for years and filed a notice of partial intervention on September 3, 2020. The allegations broke into three parts.
The first was a kickback theory built around company stock. APM Holdings allegedly gave shares in the company to physicians who were not employees but who referred patients to APM’s ambulatory surgical centers. The shares were redeemable when the company was sold, which tied a physician’s payout to the volume of referrals they sent in.3HHS Office of Inspector General. Pain Management Companies Agree to Pay $1 Million to Resolve Allegations
The second involved medical director payments. APM Holdings allegedly paid non-employee physicians to serve as medical directors, with compensation linked to procedure volume. The Justice Department said there were no written agreements defining the role, and the physicians were not required to track or report any medical director functions.
The third concerned urine drug testing. APM allegedly performed confirmatory urine drug tests without customizing test orders to individual patient risk, producing testing that the patients’ medical records did not support.
The $1 Million Settlement
On October 2, 2020, the U.S. Attorney’s Office for the Eastern District of Wisconsin announced the settlement resolving both False Claims Act and Anti-Kickback Statute allegations. The federal government’s share was $885,452, a figure set based on APM’s ability to pay. Hedstrom received $142,152 as her whistleblower share of the federal recovery.4U.S. Department of Justice. Pain Management Companies Agree to Pay $1 Million to Resolve Allegations The settlement resolved allegations only; there was no determination of liability. The Justice Department’s Civil Division, the U.S. Attorney’s Office, the HHS Office of Inspector General, and the FBI conducted the investigation.
Receivership and the Closure of Every APM Clinic
By the time the settlement was announced, the company was already failing. Golub Capital had classified $8.3 million in loans to APM Holdings as nonperforming by September 2019, an attempted sale fell through, and the pandemic’s suspension of elective procedures in early 2020 removed what remained.5Milwaukee Journal Sentinel. Advanced Pain Management Closing Ambulatory Surgery Centers
In September 2020, APM Wisconsin MSO filed a Chapter 128 petition for receivership in Milwaukee County Circuit Court, a Wisconsin state-law alternative to federal bankruptcy. The filing covered APM Wisconsin MSO, Advanced Pain Management LLC, and 11 affiliated entities. Attorney Michael Polsky was appointed receiver, and about 240 employees were laid off.6BizTimes Milwaukee. Advanced Pain Management Files for Receivership Closures had begun in August 2019 and continued in waves through the fall of 2020. By the end of the process, no APM surgery centers were still open, and additional surgery centers in Waukesha, Beaver Dam, Fort Atkinson, and Green Bay closed outside the formal receivership proceedings.7FOX6 Milwaukee. Closure of Pain-Only Practices Impacts Thousands of Patients
What Happened to APM Patients
APM physicians had seen tens of thousands of patients in 2020 alone. When the centers closed, patients struggled to find their doctors, locate new providers, and retrieve their medical records.8Becker’s ASC Review. Pain Physicians Struggle to Rebuild After 2020 Clinic, ASC Closures The receiver arranged for medical records to be held by Ciox, a third-party custodian, with a request form posted on the APM website.
Some former APM physicians opened new independent practices. By late 2020, three successor practices were operating: Pain Physicians of Wisconsin SC, Wisconsin Spine and Pain SC, and Advanced Pain Treatment SC.9Milwaukee Business Journal. Clinics Open After Advanced Pain Management These are separate businesses from the APM corporate entities that remained in receivership.
Other “Advanced Pain” Cases Are Not This Case
Several unrelated federal enforcement actions involve similarly named companies, and the names cause confusion. The Wisconsin case described above is the only one tied to the 2020 $1 million settlement and the receivership.
A separate Arizona practice called Advanced Pain Management paid $186,210 in September 2017 to settle allegations that it received free point-of-care urine drug test cups from Millennium Health, LLC in a kickback and Stark Law matter.10HHS Office of Inspector General. Arizona Pain Management Practice Settles Case Involving Kickback and Stark Allegations Advanced Pain Care, a Texas practice founded by Dr. Mark Malone, agreed in December 2025 to pay $13.625 million to resolve allegations of medically unnecessary urine drug testing billed to Medicare, Medicaid, TRICARE, and the VA between 2017 and 2021, and entered a five-year corporate integrity agreement.11U.S. Department of Justice. Austin Pain Management Doctor and Pain Medicine Practice Pay $13,625,000 to Settle Civil False Claims Act Allegations Mission Advanced Pain Management & Spine Center PC and Alfred Beshai, M.D., of Irvine, California, agreed in February 2026 to pay $451,902 over allegations of billing epidural steroid injections beyond allowed limits.12HHS Office of Inspector General. Alfred Beshai MD and Mission Advanced Pain Management Spine Center Agreed to Pay $451,000 None of these companies is the Wisconsin APM.