Long Island Woman Arrested for Medicaid Fraud: $2.5M NY Medical Equipment Scam

New York’s State Attorney General announced the arrest of Katia Donnelly, owner of Bennett Surgical Supply, Inc., a Suffolk County, New York medical equipment supplier. She is charged with fifty counts of Medicaid related fraud. Prosecutors say that she received more than $2.5 million from the state funded Medicaid program in just 6 years.

Long Island Woman Arrested for Medicaid Fraud: $2.5M NY Medical Equipment Scam

The indictment claims that Donnelly and her company used the Medicaid ID numbers of her customers to fraudulently bill Medicaid for items never requested or delivered to patients. If convicted of all charges, she could spend 25 years in prison.

Fraud involving durable medical equipment is a growing problem in New York and elsewhere. Once a company has the billing information of a client, that company can easily use that information to bill for additional equipment and supplies not needed by the patients. In Donnelly’s case, prosecutors say she submitted false invoices for custom orthotics, wound care supplies and ostomy products. They also say she forged prescriptions. In some cases, she even billed for expensive hospital beds and pressure reduction mattresses.

Bennett Surgical Billed New York State for Fictitious DME Sales

Donnelly’s business has closed its doors but managed to rack up millions in allegedly fictitious sales before being caught. Located in a town with just 203,000 residents, Bennett Surgical Supply managed to still be the largest biller in all of New York State for ostomy supplies, bariatric hospital beds, wound dressings and pressure mattresses. Effective marketing perhaps? An overabundance of injured ostomy patients in northern Suffolk County? Or fraud?

In announcing the arrest, Attorney General Eric Schneiderman said, “Stealing from Medicaid drains resources from a program that is designed to help some of our most vulnerable members of society. Our message is simple: no matter how elaborate or complex the scheme, we will root out Medicaid fraud and punish those responsible.”

Most Medicaid fraud suspects are released on bail soon after their arrest. Given the large dollar amount of the monies allegedly stolen from taxpayers and Donnelly’s frequent trips out of the United States, A New York Supreme Court Justice set bail at $500,000 cash. As this story was being written, Donnelly was still in custody.

New York State’s False Claims Act: NY Can Pay Medicaid Whistleblowers

New York partners with private citizens to help stop Medicaid fraud in the Empire state. Under New York’s False Claims Act, a private citizen can file a lawsuit in the name of the state if he or she has inside information about fraud involving state healthcare dollars. If the lawsuit is successful, the person filing the suit (called a whistleblower or “relator”) can receive up to 30% of whatever the government collects from the wrongdoers.

Each year whistleblowers in New York help the state collect millions of dollars stolen from taxpayers. In the process, these whistleblowers also receive millions of dollars in award monies.

There are many ways to report fraud in New York, only the False Claims Act will help you collect a large cash award, however.


Medicaid Fraud Hotline: 888.742.7248 or Report Online