A behavioral health services provider was convicted on May 17, 2024, for defrauding the South Carolina (SC) Medicaid Program, falsely obtaining COVID-19 relief funds, and money laundering, announced Dena J. King, US Attorney for the Western District of North Carolina.
According to trial evidence—including 25 witnesses and over 600 documents—the defendant owned and operated a Charlotte-based company which was enrolled with 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 $1.3 million dollars. For some claims, she bought the PII of Medicaid beneficiaries she used to submit claims. To further the scheme and to give the appearance that her company’s fraudulent claims were legitimate, the defendant instructed her employees to create fake clinical service notes after she filed fraudulent claims in the names of Medicaid beneficiaries.
Trial evidence established that in September 2019, the defendant was informed of audits of her company’s Medicaid claims. To cover up the fraud, she submitted fictitious patient medical records and made false statements to auditors. Trial evidence further established that the defendant engaged in money laundering and used some of the fraudulent proceeds to promote the scheme by paying for Medicaid beneficiary names and PII.
In addition to the Medicaid fraud scheme, evidence showed that from April 3, 2020, to May 14, 2022, the defendant executed a scheme to obtain fraudulent Paycheck Protection Program (PPP) loans on behalf of her company and a company owned by her boyfriend. To obtain the PPP loans, she submitted loan applications and supporting documents that contained false statements regarding the companies’ payroll expenses, number of employees, and other misrepresentations. She obtained more than $287,000 in COVID-19 relief funds for the companies.
The defendant was remanded into custody after the jury returned its verdict. A federal district court judge will determine her sentence after considering the US Sentencing Guidelines and other statutory factors. The FBI investigated the case with substantial assistance from the South Carolina Attorney General’s Office, Medicaid Fraud Control Unit, and the Small Business Administration’s Office of Inspector General.
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. A nonretaliatory environment for reporting suspicious billing practices is mandatory for all facilities.
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.
- Periodically audit to ensure that staff who have access to residents’ personal information are aware of the proper procedures to follow to prevent PII exposure. Also periodically perform audits to ensure staff are aware of their responsibility to identify and report compliance and ethics concerns, and understand that it is their responsibility to report violations to their supervisor, the compliance officer, or via the anonymous hotline.
*This news alert has been prepared by Med-Net Concepts, LLC for informational purposes only and is not intended to provide legal advice.*
