News and Press Releases

Tenncare fraud settlement announced

July 13,2011

           A $220,000 civil fraud settlement has been reached with two Florida-based providers of mental health services, announced Jerry E. Martin, U.S. Attorney for the Middle District of Tennessee and Tennessee Attorney General Robert Cooper, Jr.

              Paradigm Health Services, Inc. and Paradigm Health, LLC., (Paradigm) which provide psychotherapy and mental health evaluations to residents of Tennessee nursing homes, entered into the settlement with the United States and the State of Tennessee on July 13, 2011.  The settlement includes $112,000 recovered on behalf of the state’s Medicaid program, TennCare, and $108,000 on behalf of Medicare.

            “Ensuring accountability in federally funded health care programs remains a high priority of this office”, said U.S. Attorney Jerry E. Martin.  “We will continue our aggressive pursuit with the Tennessee Attorney General in uncovering fraudulent conduct by those in the health care industry and ensuring that proper safeguards are implemented to prevent fraud.”

            In praising the settlement,  Attorney General Robert Cooper stressed the duty of healthcare providers to have procedures in place to safeguard against fraudulent billing.  “It is incumbent upon all TennCare providers to verify that their employees properly document the services they provide,”  he said.

           The settlement is the result of an investigation into the fraudulent actions of a former Paradigm employee and Licensed Clinical Social Worker, Renee Vaughn.  Beginning in 2003 and continuing through 2006, Vaughn caused TennCare to be fraudulently billed for therapy sessions that she purportedly provided  for Tennessee nursing home residents.  Specifically, Vaughn submitted multiple invoices, claiming dozens of patient therapy sessions when she had in fact, had either not seen the patient billed for, or had spent only moments with the patient and had not provided any meaningful service to the patient. 

            Vaughn was charged with health care fraud in September, 2009 and pleaded guilty in U.S. District Court in November, 2009.  She was sentenced to three years probation in February, 2010 and was also ordered to pay $43,743.26 in restitution to TennCare and $41,956.74 in restitution to Medicare.  The civil settlement with Paradigm announced today is in addition to the restitution previously ordered to be made by Vaughn.

            There was no evidence that Paradigm was actually aware of Vaughn’s criminal conduct, and Paradigm does not admit liability in the settlement.  Vaughn has been excluded from future participation in any federal healthcare program.

            In addition to the civil settlement, Paradigm will enter into a Corporate Integrity Agreement with the Department of Health  and Human Services Office of Inspector General (HHS-OIG), which requires  the company to enact certain policies and procedures designed to detect and minimize instances of fraud and abuse. 

            This case was investigated by the HHS-OIG.  The United States was represented by AUSA Ellen Bowden McIntyre and the State of Tennessee was represented by Peter Coughlan of the Medicaid Fraud & Integrity Division of the Tennessee Attorney General’s Office.


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