Remember the old adage, “Crime doesn’t pay”? A Savannah woman learned that expensive lesson this week after being sentenced to over 3 years for Medicaid Fraud. U.S. District Court Judge William Moore sent Barbara Wallace to prison for 41 months after she pleaded guilty to defrauding Georgia’s Medicaid program.
According to the Department of Justice, Wallace was the manager of a company called MBA Diabetic Footwear Solutions. Prosecutors say that Wallace helped submit fraudulent claims to the taxpayer funded Medicaid program.
The claims were for medical equipment that was not medically necessary or not prescribed by a physician. In some cases, Medicaid was billed for items never even delivered to patients!
Wallace’s Indictment for Georgia Medicaid Fraud
Georgia’s Medicaid program provides healthcare for thousands of lower income Georgia residents. It also provides coverage for over 894,000 Georgia children. The cost of the program is split between the state and federal governments.
In addition to doctor and hospital care, Medicaid covers durable medical equipment including orthotics. MBA Diabetic sold custom made shoes and braces for those with special medical conditions.
To be eligible for reimbursement, orthotic devices must be medically necessary and be prescribed by a doctor.
Although it is unclear if Wallace owned MBA Diabetic, prosecutors say that she ran the billing office and controlled the company’s operations. They say that she was submitting claims for reimbursement even though she knew they lacked a valid prescription.
To boost sales, Wallace also directed employees to canvas neighborhoods and offer “free” services.
Although evidence suggested that thousands of orthotic devices and shoes were illegally sold, Wallace was just charged with eight counts of healthcare fraud. The claims for the devices behind each of the fraud charges varied between $193 and $397.
Under federal law, each count of healthcare fraud is punishable by tens years in prison. (Courts can even impose more a time if a patient is injured as a result of the fraud.)
Former Employee Testifies
According to an unsealed Grand Jury transcript, former MBA Diabetic Footwear Solutions employee Natasha Banner testified that Wallace would instruct medical billing clerks to simply manipulate billing codes if a current prescription could not be quickly obtained.
Banner said there was constant pressure to meet sales quotas and that often meant shipping products without proper prescriptions.
Banner says she quit in 2014 after her pay check bounced. She says that other workers also suffered bounced checks and low pay. Ironically, prosecutors say that Wallace’s scheme cost taxpayers hundreds of thousands of dollars. (Wallace has been ordered to pay $948,361 in restitution.)
While Wallace and her business partner were profiting from the illegal scheme, their own workers were sometimes not even getting paid.
Wallace Pleads Guilty
After failing in her attempts to have the case dismissed, Wallace pleaded guilty last September to a single count of Medicaid Fraud. After the plea, the court ordered a pre-sentence investigation.
In federal criminal cases, probation officers calculate a suggested sentencing range based on guidelines set by the U.S. Sentencing Commission.
Although the guidelines are not mandatory, most judges sentence within the guideline range. In Wallace’s case, the pre-sentence report suggested a sentence of 33 to 41 months.
Wallace argued that the calculations used to come up with the sentencing recommendation were flawed. Because there were so many improper claims for reimbursement, prosecutors used a random sample of 200 claims. From that sample, they calculated the percentage of claims that didn’t meet Medicaid guidelines. Wallace argued that the sampling methodology was wrong.
Instead of a minimum 33 month sentence, Wallace thought she should receive as little as no jail time! Judge Moore was unmoved and noted that Wallace had prior convictions for bankruptcy fraud, social security fraud and bank fraud. Instead, he sentenced her to the maximum guideline range of 41 months.
In announcing the sentence, prosecutor James Durham said, “The Department of Justice will continue to vigorously investigate and prosecute healthcare fraud in its many different forms. This defendant is no stranger to fraud schemes, having now racked up another federal conviction. Those who attempt to steal the taxpayer’s money through healthcare fraud and other scams can expect to join this defendant in a federal prison cell.”
The case against Wallace was investigated jointly by the FBI, US Department of Health and Human Services and state investigators. Georgia Medicaid fraud cases are often handled solely by the Georgia Medicaid Fraud Control Unit. This case follows an increasing trend of joint state-federal Medicaid prosecutions.
Georgia’s Attorney General Chris Carr said after sentencing, “The Office of the Attorney General will not stand by and allow those who commit fraud to take advantage of programs that are intended to support our state's most vulnerable citizens. Our Georgia Medicaid Fraud Control Unit will continue to provide vital investigative and prosecutorial support to our partners at the federal and local levels, so that we can guarantee those who seek to undermine the integrity of the Medicaid system are prosecuted to the full extent of the law.”
Cash Awards for Georgia Medicaid Fraud Whistleblowers
Most Medicaid fraud prosecutions begin with tips from concerned citizens. Often the tipsters are patients or healthcare professionals employed by the wrongdoer. No one likes fraud and greed.
Both Georgia and the United States have robust whistleblower award programs. Because Medicare and Medicaid are government funded, whistleblowers with inside information about fraud involving these programs can earn large cash awards for their assistance.
Earning an award is as easy as locating a whistleblower lawyer and filing a False Claims Act case in state or federal court. If you are first to file (or first with specific, new information), you can receive up to 30% of whatever is collected from the wrongdoer.
With multi-million dollar penalties common, large awards are frequent.
State and federal laws also have robust whistleblower protection provisions designed to shield workers from illegal workplace retaliation.
If a healthcare worker or other insider is fired or demoted for becoming a whistleblower, they can receive both the 30% whistleblower award plus double lost pay and attorney’s fees.
Is your employer or other healthcare provider cheating Medicaid or Medicare? Report the fraud and perhaps earn a whistleblower cash award.
Call 888.742.7248¬ or¬ Report Online
Need more information before reporting? Visit our Georgia Medicaid Fraud information page.