According to court records filed Friday, State Rep. Randy Davis of Daphne is attempting to avoid prosecution from federal conspiracy and bribery charges through pretrial diversion regarding an indictment unsealed in Montgomery last year.

Prosecutors allege Davis and at least three codefendants participated in a scheme to profit from a chain of privately owned diabetes clinics by lobbying for health care legislation necessary for the firm’s financial success.

On Jan. 4, 10 days before a trial in the case was scheduled to begin, clinic president G. Ford Gilbert pleaded guilty to one count of conspiracy, while Davis filed a pretrial diversion application seeking leniency in exchange for cooperating with investigators and possible courtroom testimony. Lobbyist Martin J. Connors filed an identical application the same day, while a fourth defendant in the case, former State Rep. Jack Williams of Vestavia Hills, applied for pretrial diversion in November.

But the applications may violate Department of Justice guidelines on pretrial diversion, which suggest “a public official or former public official accused of an offense arising out of an alleged violation of a public trust” is ineligible.

A representative of District 96 from 2002 until his resignation last year, prosecutors initially alleged Davis joined former State Rep. Micky Hammon in accepting a 4 percent “finder’s fee” to recruit investors into the business, while teaming up with Williams in the State House to influence legislation that would have forced the state’s primary insurer to reimburse the clinics for providing a controversial diabetes treatment.

Known as outpatient intravenous insulin therapy (OIVIT), the indictment claimed two clinics Gilbert opened in Foley (2014) and Fairhope (2015) to provide OIVIT “initially generated revenue” because of a “health care fraud” known as “unbundling” — where billing codes are manipulated and altered to maximize reimbursement. In this case, prosecutors claim, the clinics were billing insurers for component parts of the treatment rather than the treatment itself, which would not have been reimbursed.

As Gilbert was securing the help of his codefendants to expand the business in North Alabama, the indictment stated, he was also mired in a bureaucratic struggle with Blue Cross and Blue Shield of Alabama to reimburse for OIVIT. In March 2016, after Gilbert and the codefendants failed to convince Blue Cross to voluntarily cover the treatment, they introduced a draft bill to the House Commerce and Small Business Committee, with Gilbert and Davis allegedly testifying in favor of it, as Williams chaired the meeting.

Williams eventually prevented the committee from voting on the bill, but in subsequent communications, Gilbert continued to threaten legislative action against Blue Cross and Blue Shield of Alabama.

Davis, who was a public school teacher and band director before being elected to the Legislature, allegedly emailed one investor he hoped “would make millions on this deal.” In the indictment, Davis was referred to as a “first-level seller of territorial rights” for Gilbert’s clinics, who in his elected position “did advise and pressure” fellow lawmakers to influence Blue Cross and Blue Shield of Alabama to pay for OIVIT. It further charged him with a violation of the Travel Act for “sending email messages in furtherance of a state law bribery scheme.”

But in a trial brief filed by prosecutors Dec. 28, Davis’ role appeared to be minimized. Davis, they now claimed, simply “agreed to help Hammon recruit investors” and later, “motivated in part by his friendship with Hammon and his desire to assist Hammon’s business venture, agreed to support the bill.”

Still, the brief notes that during the meeting of the House Commerce and Small Business Committee where Davis spoke in favor of the proposed bill, “Davis falsely claimed that the Foley and Fairhope clinics were located inside his district. As he knew, neither one actually was.”

According to the Justice Department, pretrial diversion “is an alternative to prosecution which seeks to divert certain offenders from traditional criminal justice processing into a program of supervision and services administered by the U.S. Probation Service.” But most offenders are diverted before they are charged. “Participants who successfully complete the program will not be charged or, if charged, will have the charges against them dismissed; unsuccessful participants are returned for prosecution.”

Hammon, who was portrayed by prosecutors as motivated by the scheme as a method to pay off a $235,000 personal bank debt, was never charged in the case. However, he pleaded guilty to an unrelated mail fraud case in 2017 involving campaign funds and was automatically removed from office after a 15-year career in the Legislature. Though he faced up to 20 years in prison, Hammon was sentenced to just 90 days and was released from prison in late June.
He was also ordered to pay $50,657 in restitution to previous campaign contributors.

Meanwhile, Gilbert’s guilty plea is pursuant only to the conspiracy charge — one of seven in the indictment. If convicted, he faces a maximum of five years in prison and $250,000 in fines.

Federal court staff have been affected by the government shutdown and were unavailable for comment, but in November Clark Morris, then acting U.S. Attorney in Alabama’s Middle District, told the Vestavia Voice charges against Williams had not been dropped as a result of his application for pretrial diversion.

“In order to have the charges dropped, Williams must complete the agreement,” Morris said, adding the agreement may never be part of public record.

Morris has since moved to the Alabama Office of Attorney General, tapped as the head of the office’s public corruption unit after Attorney General Steve Marshall fired former prosecutor Matt Hart late last year.

Unless U.S. District Court Judge Myron Thompson accepts Gilbert’s plea and pretrial diversion application, the trial has been postponed until April 15.