The Higher They Are, The Harder They Fall

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Fraud can occur at all levels of an organization, but today’s case involving Medicaid fraud started at the top, went sideways, then worked its way down involving several unscrupulous individuals. The former president of a health practice in Greenville, North Carolina conspired with another behavioral health provider and his staff to rob the Medicaid program of nearly $6 million across two states. Read on to find out how he and his deceptive team absconded with so much cash.

Today’s healthcare executive was the last top dog to get sentenced for his involvement in the Medicaid fraud scam. He was revealed when the other behavioral health provider and his team were investigated. The last fraudster to be convicted provided hundreds of patient names and identifiers to the co-conspirator, who then had his biller submit fraudulent claims to the government healthcare program for mental health services that were never provided.

The provider who handed over patient names split the reimbursements with the other healthcare provider and his biller. His payments were in the form of fictitious, no-document loan repayments. A no document loan only requires a loan application and a signature, but no proof of employment, bank statements or tax returns are required. (This makes qualifying easier for applicants who have difficulty verifying their income and assets. It apparently makes hiding illicitly gained funds easier as well.)

It turns out that the former healthcare executive from Greenville lied about his involvement with the other executive. (While appearing before a federal grand jury, he lied to them and said he had no business relationship with the co-conspirator. Let me remind you that it is a really bad idea to lie under oath.)

The Greenville provider found himself in deeper trouble as the investigation into the other healthcare provider proceeded. Investigators discovered that the man also defrauded the South Carolina Medicaid program and was paid millions for bogus services through another provider he owned. (I guess he figured if it worked in North Carolina, why not take the scam South?)

The 47-year-old former top executive from Greenville, North Carolina pleaded guilty to his part in the Medicaid fraud scam. He was sentenced to eight years in prison for healthcare fraud and another five years in prison for perjury. The terms will be served concurrently. He also must pay restitution of $5,998,874.86 to the North Carolina Medicaid Program, the South Carolina Medicaid Program and another victim. (And, that’s not all folks.) He has to serve three years of supervised release and forfeit another $939,989.50 in criminal proceeds. (The icing on the cake is that he is permanently banned from participating in federal healthcare benefit programs.) Just so you know, the co-conspirator executive got 20 years behind bars, while his biller received a nine-year sentence and another Medicaid provider must serve three years.

This case just goes to show that the government will go after fraudsters just as they would a drug dealer or other violent criminal. The man at the center of today’s story was a big executive, who used his position to steal benefits he didn’t deserve at the expense of his clients. (This man was a powerful guy who fell hard.)

Today’s “Fraud of the Day” is based on a Department of Justice press release entitled, Eastern Carolina Behavioral Health CEO Sentenced to Eight Years in Prison for Expansive Multistate Healthcare Fraud,” released on May 2, 2018.

RALEIGH – United States Attorney Robert J. Higdon, Jr. announced that yesterday afternoon in federal court, SHEPHARD LEE SPRUILL, 47, of Greenville, North Carolina, was sentenced to 96 months in prison on the charge of Health Care Fraud Conspiracy, and 60 months in prison for Perjury, to be served concurrently.  Spruill was also ordered to make restitution in the total amount of $5,998,874.86, payable to the North Carolina Medicaid Program, the South Carolina Medicaid Program, and another victim of the scheme.  Spruill was further ordered to serve a three year term of supervised release, and to forfeit an additional $939,989.50 in criminal proceeds.  Under the terms of his plea agreement, Spruill is also banned from participation in Federal healthcare benefit programs for life.

Spruill’s case arose out of the investigation of Pitt County behavioral health provider Terry Lamont Speller, his biller, Donnie Lee Phillips, II; and another Medicaid provider named Reginald Saunders.  Each of these defendants were previously sentenced by Senior U.S. District Judge James C. Fox to 20 years, 9 years, and 3 years, respectively.

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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.