Oneida doctor sues insurance company amid pill mill investigation

Dr. David Bruce Coffey’s Oneida clinic burned to the ground in January 2020, shortly after the DEA allegations against him became public.

ONEIDA, Tenn. — A Scott County doctor who pleaded guilty to illegally distributing addictive pills has sued his insurance company for $4 million after a January 2020 fire destroyed his Oneida clinic. 

Dr. David Bruce Coffey’s clinic filed a breach of contract suit against Grange Insurance in Scott County Chancery Court in December 2020, records show. The insurance company petitioned to move the case to federal court in January 2021. 

Coffey held a $2,815,670 insurance policy on his clinic when it burned to the ground in the early hours of January 30, 2020, the filing showed. 

The Tennessee Bureau of Investigation is assisting Oneida Police in its investigation into what caused the fire. A TBI spokesperson said Tuesday it considers the fire suspicious, and the bureau’s investigation remains ongoing. 

In 2019, the Drug Enforcement Agency alleged Coffey ran a streamlined operation that was the primary supplier for drug trafficking organizations in three southeastern Kentucky counties. It said Coffey prescribed 4.9 million addictive pills over eight years. 

Under the terms of a plea agreement reached last fall with the U.S. Attorney’s Office, Coffey will plead guilty to illegally distributing 60 oxycodone pills and depositing the money he made illegally into his bank account. 

Coffey’s crimes carry a maximum sentence of 20 years in federal prison, however, he could face less than one year in prison under the terms of the plea deal, said defense attorney T. Scott Jones.   

The U.S. Attorney’s Office previously did not respond to a request for comment. Coffey’s attorney in his criminal case, Greg Issacs, previously declined to comment, citing the pending federal matter.

Lawsuit over insurance policy

Coffey’s clinic sued Grange Insurance for $3,450,000 for “breach of contract,” in addition to a “bad faith penalty” of $862,500. In all, Coffey seeks $4,312,500 following the fire at 281 Underpass Drive in Oneida.

Grange denies Coffey is eligible for the money he requested, according to the filings. The company cites the insurance policy’s fraud, dishonesty and virus provisions, among others, to support not paying out the policy.

The clinic’s filing said investigators from the insurance company interviewed Coffey, his wife, Charlsey, and his son, Brandon, under oath in May. 

After the fire, Coffey moved his clinic to a new location in Oneida, but saw a “significant decline” in revenue, the filing said. It said Grange determined that loss in revenue was related to the COVID-19 pandemic and refused to make loss of business payments.

Coffey contributed $150,000 of his own money to keep seeing patients, his filing said. He announced the clinic would close in August 2020, citing the fire and COVID-19 issues.

The matter is scheduled for a telephone hearing in U.S. District Court for the Eastern District of Tennessee on Wednesday. According to a filing, the parties have scheduled expert witness depositions for mid-February. A jury trial is currently scheduled for late June.