Extra Padding

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There are several places where it’s nice to have extra padding. For some, a soft foam topper on a firm mattress could help facilitate a more comfortable night of rest. Individuals who regularly travel from coast to coast on a bare-bones economy airline might prefer a thicker cushioned seat (not to mention more leg room) for the long flight. One place where extra padding is not needed is on bills submitted to government healthcare programs. A Sumter, South Carolina-based business that previously treated Autism patients is the focus of today’s “Fraud of the Day”. Two former employees pleaded guilty to healthcare fraud because they got caught padding bills with extra charges related to services that were partly or never provided.

The former director of clinical services and the company’s co-founder recently pleaded guilty to making false statements related to Medicaid benefits over seven-and-a-half years. An investigation into the healthcare fraud case was opened when a former employee filed a lawsuit under the whistleblower provisions of the False Claims Act. Her tip exposed the fact that the organization was padding billable time for autism therapists who were not working with the company’s patients during the hours claimed. (The whistleblower received $435,000 from the settlement, proving that at times, it does pay to be a tattletale.)

The next target on the list for this embezzlement case is the other co-founder. She was indicted for allegedly working with co-conspirators to defraud Medicaid and Tricare through over-billing for autism-related treatments for more than nine-and-a-half years. Even though the co-founder had good intentions when she founded the company, (her son was born with autism and she wanted to dedicate her life to providing high quality care to children with autism and their families) she is now facing restitution of more than $9 million if convicted. (Keep in mind that as a condition of their plea deal, the two convicted employees have to testify during the accused co-founder’s trial. That probably won’t bode so well for the mother and business owner.)

As part of a settlement agreement, the company agreed to pay more than $8.8 million to resolve the False Claims Act investigation regarding the healthcare fraud scam involving false claims to South Carolina’s Medicaid program and Tricare. The company was acquired by another business that has since implemented substantial measures to prevent this type of fraud from occurring again.

As for the two South Carolina-based employees who pleaded guilty to healthcare fraud, they are both facing a $1,000 fine and prison time for up to one year plus one year of supervised release and a special $25 assessment for each misdemeanor charge conviction. Ironically, these two might be headed to a place where there isn’t much padding. (Perhaps if they testify in the case against the other co-founder, they may receive a cushier sentence.)

Today’s “Fraud of the Day” is based on an article entitled, “2 more plead guilty in Sumter Early Autism Project fraud,” published by The Sumter Item on January 31, 2019.  

An embezzlement case related to Sumter-based Early Autism Project Inc. over-billing insurance companies continues as two former employees pleaded guilty earlier this month to making false claims for services that were partly or never rendered.

In plea agreements dated Jan. 11 and Jan. 16 for former director of clinical services Angela Keith and co-founder Ann Eldridge, respectively, the two defendants agreed to waive indictment and arraignment and pleaded guilty to making false statements in relation to Medicaid benefits between January 2009 and June 2016.

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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.