A behavioral health services provider from Charlotte, North Carolina, was sentenced on November 22, 2024, to 135 months in prison for Medicaid fraud, COVID-19 fraud, and money laundering. The defendant, 42, of Charlotte, was also ordered to serve three years of supervised release and to pay $481,436.08 in restitution.
According to court documents, evidence presented at trial, and witness testimony, the defendant owned and operated a Charlotte-based company, which was enrolled in the South Carolina Medicaid Program (SC Medicaid) to provide outpatient behavioral health services to eligible Medicaid beneficiaries. Under SC Medicaid rules, beneficiaries are allowed to use providers within 25 miles of the South Carolina border, including Charlotte. From 2016 to 2021, the defendant’s company submitted fraudulent reimbursement claims to SC Medicaid and its contracted managed care organizations for rehabilitative behavioral health services that were never provided.
To carry out the scheme, the defendant used the personal identifying information (PII) of qualified SC Medicaid beneficiaries to file reimbursement claims totaling more than $1.2 million. In some instances, she billed SC Medicaid for more than 11 hours and up to 19 hours of one-on-one counseling services in a single 24-hour period. She furthered the scheme by instructing employees to create fake clinical service notes after filing fraudulent claims in the names of Medicaid beneficiaries.
During the investigation, FBI agents identified and interviewed 21 Medicaid beneficiaries whose names, Medicaid numbers, and PII had been used in fraudulent claims filed by the defendant and her company. Each of these beneficiaries stated that neither they nor their children had received mental health services from her. Many beneficiaries noted that the information written about them in assessments and clinical notes was false, while others stated that their signatures had been forged.
In addition to Medicaid fraud, the defendant engaged in money laundering, using some of the fraudulent proceeds to promote the scheme by paying for Medicaid beneficiary names and PII.
Court documents show that in September 2019, the defendant was informed of audits into her company’s Medicaid claims. To cover up the fraud, she submitted fictitious patient medical records and made false statements to auditors. Investigators found that the fraud was so widespread that it was impossible to distinguish fraudulent claims from legitimate ones.
From April 3, 2020, to May 14, 2022, the defendant also executed a scheme to obtain fraudulent Paycheck Protection Program (PPP) loans on behalf of her companies, including the behavioral services provider and a purported event planning business owned by her boyfriend and co-conspirator. To obtain the PPP loans, she submitted loan applications and supporting documents containing false statements about her companies, payroll expenses, number of employees, and other misrepresentations. She ultimately obtained more than $287,000 in COVID-19 relief funds for her companies.
During the trial, the court heard testimony that the defendant had contacted prospective witnesses in violation of her bond conditions. One witness identified a recorded phone call in which the defendant suggested that the witness falsely testify that the defendant had provided mental health services to the witness’s children. The court noted the defendant’s attempt to obstruct justice when announcing her sentence.
The defendant remains in federal custody and will be transferred to the Federal Bureau of Prisons upon designation of a facility.
Compliance Perspective
Issue
It is the obligation of each nursing facility to protect residents from financial abuse and exploitation by taking the required precautions in keeping residents’ PII as confidential as possible. Also, misuse of allocated public funds can be seen as fraud, waste, and abuse of government funds. It is illegal to submit claims for payment to Medicare or Medicaid that you know or should know are false or fraudulent. Filing false claims may result in fines of up to three times the programs’ loss plus $11,000 per claim filed. Under the civil False Claims Act, each instance of an item or a service billed to Medicare or Medicaid counts as a claim, so fines can add up quickly. Facility staff should be knowledgeable in how to report suspicious billing practices. Facilities must ensure a non-retaliatory environment for reporting suspicious billing practices.
Discussion Points
- Review your policies and procedures on protecting residents’ PII and preventing financial abuse and exploitation. Also review your policies and procedures for preventing and reporting a false claim. Update your policies if needed.
- Train staff who have access to residents’ PII on your policies for protecting the information. Train all staff on your compliance and ethics policies and procedures upon hire and at least annually, including their responsibility to identify and report any concerns of fraud, waste, or abuse of government funds in a timely manner. Include information on how to report concerns and suspected violations, and make sure staff know that prompt reporting is mandatory. Document that the trainings occurred and file the signed documents in each employee’s education file.
- Conduct regular audits to verify that staff who have access to residents’ personal information are following proper procedures to protect PII. Additionally, audit staff awareness of their responsibility to report compliance and ethics concerns, ensuring they understand the importance of timely reporting to supervisors, compliance officers, or the anonymous hotline.
*This news alert has been prepared by Med-Net Concepts, Inc. for informational purposes only and is not intended to provide legal advice.*
