A South Carolina family has been sentenced to federal prison for conspiracy to commit wire fraud in a scheme to defraud South Carolina Medicaid of over $3.6 million. The family members consisted of a husband and wife and two sisters of the husband.
The evidence presented during the defendant’s guilty plea and sentencing hearings included that the family members had founded two companies. Both of the companies claimed to provide rehabilitation behavioral health services to disabled, low-income individuals in South Carolina through the Medicaid program. Between 2014 and 2016, the two companies billed the South Carolina Medicaid program for millions of dollars for provision of “crisis intervention” which is a service offered to individuals experiencing extreme emotional distress, such as suicidal thoughts or mental breakdowns.
Clients for whom South Carolina Medicaid was billed for crisis intervention were contacted by investigators, and it was discovered that although they had received some services from the companies, they had not received any crisis interventions. The services provided by the companies should have been billed at approximately $9.00 per hour but instead were billed to Medicaid under the crisis intervention services category for which Medicaid paid $67.88 per hour.
Once an audit was conducted by Medicaid investigators of the first company operated by the family and the irregular billing was discovered, the family immediately started to use their second company to continue with the fraudulent billing practices.
The husband in this scheme was sentenced to 51 months in federal prison, the wife received 39 months in federal prison, and the husband’s two sisters were each sentenced to 33 months in federal prison. There is no parole in the federal system. All defendants were also given a three-year term of court-ordered supervision and ordered to repay $3,647,094.83 in restitution to South Carolina Medicaid.
Acting U.S. Attorney M. Rhett DeHart stated, “Stealing from agencies that serve those in distress is shameful and illegal. This office worked with our partners in the South Carolina Attorney General’s Office to not only prosecute these defendants, but to put a stop to their illegal practices.”
Compliance Perspective
Issue
All staff should be knowledgeable in how to report suspicious billing practices. A nonretaliatory environment for reporting concerns with options to report anonymously is mandatory for all facilities. Billed services must be reasonable and necessary. Staff should be knowledgeable of what may be considered a false claim. Ensure that all staff are aware that these violations can occur, and that reporting is mandatory. Failure to promptly report a false claim can result in lawsuits, fines, and other sanctions. Additional information is available in the Med-Net Corporate Compliance and Ethics Manual, Chapter 1, Compliance and Ethics Program, CP 2.3 General Legal Duties and Antitrust Laws.
Discussion Points
- Review policies and procedures for preventing and reporting a false claim. Update as needed to ensure they are current.
- Train all staff on the False Claims Act and what can be considered a false claim. Include information on how to report concerns and suspected violations, and that prompt reporting is mandatory. Document that the trainings occurred and place in each employee’s education file.
- Periodically audit staff understanding to ensure that they are aware of what should be done if they suspect a false claim has occurred, whether intentionally or unintentionally. Conduct audits of documentation and billing practices routinely to prevent and detect errors before they progress to a false claim.
