Minnesota Attorney General Keith Ellison announced on August 29, 2023, that his office had charged five people as part of a scheme to defraud the Minnesota Medical Assistance (Medicaid) program out of approximately $9.5 million. To date, this is the largest Medicaid fraud prosecution charged by the Minnesota Medicaid Fraud Control Unit (MFCU) of the Attorney General’s Office.
The two owners of a personal care assistant (PCA) services agency, two managers, and a biller were each charged with one count of racketeering, one count of engaging in business of concealing criminal proceeds, and eleven counts of aiding and abetting theft by swindle (over $35,000).
The Attorney General’s complaint alleges that the five defendants defrauded the Medicaid program by:
- Billing for services not provided. As documented in an 18-page statement of probable cause, MFCU investigators found that the agency fraudulently billed the Medicaid program for more than 25,000 hours of services that were not provided. The investigation found that without the knowledge of personal care assistants, the agency frequently billed as if PCAs provided services to clients whom the PCAs did not know or recognize when shown photographs. In interviews with MFCU investigators, PCAs regularly stated that they did not provide services to recipients that were billed under their name and provider number. The agency received more than $1.6 million for services billed but not provided.
- Billing for PCA services that were not supervised by a nurse or other qualified professional. To protect the health and safety of clients, and to ensure clients receive appropriate and medically necessary care from their PCA, Minnesota law requires that PCA services be supervised in regular intervals by a registered nurse, mental-health professional, or other individual defined by law as a qualified professional (QP). MFCU investigators found that at times, agency clients went years without any supervision by a QP. Minnesota law further mandates that PCA services must be supervised by a QP to be eligible for payment from Minnesota’s medical assistance program. The agency received more than $7.8 million in Medicaid funds for the unsupervised PCA services of at least 120 clients.
The Attorney General’s complaint further alleges that the five defendants then concealed the proceeds of their crimes through an elaborate check-cashing scheme. The defendants frequently wrote checks in the names of PCAs whose identities were used to bill fraudulently, cashed the checks written in others’ names, and kept the cash for themselves. As a result of this scheme, some PCAs received artificially inflated W2s that indicated they received wages from the agency that they did not.
The two owners also fraudulently listed their wives as “board members” and “consultants” at the agency and paid them hundreds of thousands of dollars in “salary.” The “salary” went into joint bank accounts where the owners had the ability to withdraw or transfer the funds into their own accounts.
The defendants engaged in other illicit activities described in the complaint as well, including recruiting clients and PCAs with the intent of using them to defraud the Medicaid program and falsifying information to obtain loans related to COVID-19 relief programs.
Thus far, 18 people have been charged as part of this investigation. Outside of the five defendants charged on August 29, who owned and ran the agency, seven other individuals who served as recruiters, an office manager, or PCAs were charged earlier in August with a total of 32 counts of aiding and abetting portions of the agency’s fraud and one count of identity theft. Six individuals were previously charged, five of whom pleaded guilty. Additional charges are expected against other individuals as the investigation continues.
Compliance Perspective
Issue
Fraud, waste, and abuse of federal or state resources is always illegal. Healthcare fraud harms the vulnerable in our communities, our healthcare system, and our basic expectation of competent, available care. It also contributes to rising healthcare costs. Those who engage in healthcare fraud are stealing from taxpayers while jeopardizing the health of Medicare and Medicaid beneficiaries. Curbing fraud is vital to conserving scarce healthcare resources and protecting beneficiaries.
Discussion Points
- Review the facility’s policies and procedures regarding fraud, waste, and abuse prevention and detection, and update policies as needed to incorporate information on how to respond to any fraudulent criminal activities staff may encounter.
- Train staff on fraud, waste, or abuse of federal and state resources. Ensure they understand that it is their responsibility to immediately report any suspicion or knowledge of fraudulent activity to their supervisor, the compliance officer, or via the Hotline.
- Periodically audit staff to ensure that they are aware of what could be perceived as fraud, waste, or abuse of federal or state resources and the steps that they should take to report suspected fraudulent activity. Periodically conduct auditing and monitoring of vendor transactions to ensure they are in agreement with compliance and ethics policies and government standards.
*This news alert has been prepared by Med-Net Concepts, LLC for informational purposes only and is not intended to provide legal advice.*
