Not A Good Idea

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There are many things in life that are not a good idea. For instance, signing up for a 26.2-mile race, but not practicing for it months in advance could be disastrous to your health. Parking on Filbert Street – the steepest street in San Francisco – without using your parking brake is a really, really bad idea. (Look it up on the Internet and you’ll see what I mean.) Similarly, lying under oath ranks at the top of the list for all time “No-Nos” that seemed like a great idea at the time. The president of a behavioral practice in North Carolina committed Medicaid fraud by boldly lying under oath in court to cover up his fraudulent acts.

The healthcare professional partnered up with two other co-conspirators who have already been imprisoned for their part in the crime detailed in today’s article. Their scheme was connected to a clinic known as “The Medical Office,” which was located in Pitt County, North Carolina. At the time of the scheme, today’s fraudster was the president of a separate behavioral practice where he had access to the personally identifiable information (PII) of patients, including names and Medicaid Identification Numbers. (He provided this information to the two co-conspirators who used them to fraudulently bill Medicaid for more than $2 million in bogus services.)

The North Carolina Medicaid Program processed the claims and sent payment to one of the co-conspirators, who then paid today’s fraudster a cut of the proceeds, disguised as a loan repayment. Further research reveals that the incarcerated man, who paid our “fraudster of the day,” began billing the state’s Medicaid program in connection with a Medicaid provider he operated. (Apparently, he generated stacks of fraudulent medical records to substantiate the claims for the false services.)

Even though the state’s Division of Medical Assistance (DMA) suspended the crook’s company as a Medicaid provider, he found ways to continue the fraud scheme – mainly by using the names of other providers that included companies (eight to be exact) that were placed in the names of close family members. He got caught for submitting an altered check to the Medicaid program for the purpose of establishing a direct deposit into an alleged non-profit business he operated. (He used this particular account to pay out around $4.9 million in illegally collected Medicaid funds.)

The other incarcerated co-conspirator used the identities of more than 2,000 minor children to submit false billings. (He was caught on audio tape carrying out the fraud.) While he attempted to collect $5 million from the government healthcare program, his payout portion was around $300,000.

Today’s 46-year-old fraudster made the distinct error of testifying before a federal grand jury that he had absolutely no business relationship with the co-conspirator who paid him under the guise of a loan and he did not know why the payments were being split. (Pause for a deer in headlight moment. It was definitely a bad idea to claim that.)

What followed this defining moment in court was a plea agreement where the former behavioral health executive admitted that he lied about the facts to the grand jury. He ended up pleading guilty to conspiracy to commit healthcare fraud and perjury. At sentencing, he will face up to 15 years in prison, a $500,000 fine and three years of supervised release. In addition, he agreed to pay the North Carolina Medicaid program $1,846,377 and any additional restitution related to any other fraud committed by or through the other eight providers.

Greed can cause otherwise sane and intelligent people to do strange things. This North Carolina businessman was probably enjoying his cut of the deal by spending it on things that made his life more comfortable, while not considering the impact his illegal acts were having on honest tax payers and the vulnerable victims he stole from. His decision to lie about his part in this deceptive crime was a huge error even though it seemed like the thing to do at the time. (The government is quite proficient about shining the spotlight on liars. It’s a sure bet that he would be facing a lighter sentence if he had only confessed his part in crime to begin with.)

Today’s “Fraud of the Day” is based on an article entitled, Pitt County behavioral health president pleads guilty to Medicaid fraud, conspiracy and perjury chargesposted on WITN.com on August 4, 2017.

RALEIGH, NC (WITN) The United States Attorney for the Eastern District of North Carolina says 46-year-old Shephard Lee Spruill II of Winterville, pleaded guilty to conspiracy to commit health care fraud, and perjury.

Under the terms of a plea agreement, Spruill faces up to 15 years in prison, $500,000 in fines, and 3 years of supervised release.

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Larry Benson
Larry Benson is currently the Director of Strategic Alliances for Revenue Discovery and Recovery at LexisNexis Risk Solutions. In this role, Benson is responsible for developing partnerships for the tax and revenue and child support enforcement verticals. He focuses on embedded companies that have a need for third-party analytics to enhance their current offerings.