No Vacancy – Just Empty Rooms

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Bethel, Alaska is not a very large community. However, with a population of around the mid-6,000s, it is actually the largest community in western Alaska, as well as the 9th largest in the entire state. Unfortunately, that status did not necessarily help the financial success for Bethel’s Tundra Suites hotel. Today’s “Fraud of the Day” focuses on the owner and an employee of Tundra Suites, who engaged in a flagrant Medicaid fraud scheme in an attempt to right the hotel’s struggling financials. Here’s how it worked.

Medicaid recipients who fly into Bethel, Alaska for medical appointments do not pay cash for things like food, hotel rooms and taxi fare. Instead they use vouchers, which local companies then submit to Medicaid for reimbursement. An employee of Tundra Suites decided to take advantage of this system in an attempt to help her boss’s struggling business. As a result, Tundra Suites began billing the government for Medicaid recipients who never actually stayed at the hotel. The owner allegedly did not know about the scheme for months.

When it comes to fraud, subtler schemes tend to last a bit longer than plainly obvious ones. That fact was apparently lost on the fraudsters at the Tundra Suites. On multiple occasions, Tundra Suites billed the government for more Medicaid recipients than there were even rooms in their hotel (a tad bit of a giveaway). According to charging documents, the hotel’s Medicaid billing increased from an average of $4,000 per month to an outrageous high of $57,000 for the month of December 2017 (again, subtlety does not seem to be the strong suit here).

As a result, both the owner and employee of the Bethel, Alaska hotel were charged with two felonies: medical assistance fraud and scheme to defraud.

Today’s “Fraud of the Day” is based on an article entitled, “Bethel’s Tundra Suites hotel charged with Medicaid fraud,” posted on alaskapublic.org on July 12, 2018.

The owner of Bethel’s Tundra Suites hotel has been charged with Medicaid fraud.

When Medicaid recipients fly to Bethel for medical appointments, they pay for their food, hotel rooms and cab rides with vouchers in lieu of payment. Local companies then use those vouchers to bill Medicaid for reimbursements. Tundra Suites’ owner, Chin S. Kim, age 58, is accused of billing the government for Medicaid recipients who never actually stayed at his hotel. Alaska’s Office of Special Prosecutions has also charged Tundra Suites employee Mi Ae Young, age 56, in the alleged scheme.

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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.