False Claims and Ghost Employees: $87M Home Health Conspiracy Continues to Unravel

Two Pittsburgh residents — and home health employees — have pleaded guilty in federal court to one count each of conspiracy to defraud the Pennsylvania Medicaid program and health care fraud. United States Attorney Scott Brady announced the guilty pleas last week.

Between 2011 and 2017, both Terra Dean and Larita Walls admitted they played a role in a wide-ranging conspiracy to defraud the Pennsylvania Medicaid program. They did so by submitting fraudulent claims for services they never provided.

Overall, the scheme netted more than $87 million, federal watchdogs estimate.

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During the multimillion-dollar scheme, Dean and Walls were both home health employees at Pittsburgh-based Moriarty Consultants Inc., which was one of the four home health companies that were named in the Department of Justice’s announcement last week. The other three were Activity Daily Living Services Inc., Coordination Care Inc. and Everyday People Staffing Inc.

Moriarty Consultants was approved under the Pennsylvania Medicaid program to offer certain services to qualifying Medicaid recipients. Of the $87 million worth of fraudulent claims from the scheme, $80 million came from personal assistant services.

Each charge — both for conspiracy and health care fraud — carries a maximum total sentence of 10 years in prison, a $250,000 fine, or both. The actual sentences will depend on other factors, such as the defendants’ criminal history, for example.

“Dean and Walls each admitted causing losses to the Pennsylvania Medicaid program in excess of $150,000,” the Department of Justice said in its announcement.

The two former home health employees also admitted that they had submitted Medicaid claims from ghost employees, which sometimes included the names of relatives. The personal assistance services they submitted claims for were never provided to those listed on the claims. They would also pay off consumers so that they’d also cooperate in the scheme, according to DOJ officials. 

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The defendants are scheduled to be sentenced on May 19.

In April 2019, Autumn Brown and Brenda Horton were sentenced to probation for their roles in the scheme. The probation included six months of home detention, with Brown ordered to pay $68,000 in restitution and Horton was ordered to pay $67,000 to the Pennsylvania Medicaid program.

Overall, about 20% of the Pennsylvania population is covered by Medicaid or CHIP, according to Kaiser Family Foundation statistics. The state’s Medicaid program covers one in six adults, two in three nursing home residents, two in five individuals with disabilities and one in six Medicare beneficiaries.

As of October 2019, Pennsylvania’s Medicaid program totaled $30 billion, with managed care and long-term care accounting for 53% and 35% of that spending, respectively.

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