Breathitt County Ambulance Company, Owner, and Billing Manager Sued for Fraudulent Claims to Medicare and Medicaid

LEXINGTON – The United States Government has sued a Breathitt County ambulance company, its owner, and billing manager for violations of the False Claims Act, a federal law that prohibits people from submitting false or fraudulent claims for payment from the federal government.

On Friday, June 3, 2016, the United States filed suit against Arrow-Med Ambulance, Inc. (“Arrow-Med”), Herschel Jay Arrowood, and his wife, Lesa Arrowood, alleging that the company submitted numerous fraudulent claims seeking payment for unnecessary non-emergency ambulance transports, and that the Arrowoods caused the company to make those fraudulent claims. Jay Arrowood is the owner of Arrow-Med and Lesa Arrowood serves as its billing manager. According to the complaint, the false claims caused more than a million dollars in loss to the Medicare and Kentucky Medicaid programs.

The Arrowoods also allegedly instructed and pressured employees to falsify patients’ medical records to justify the unnecessary services to help ensure payment from Medicare and Medicaid. In addition, the complaint describes how the Arrowoods converted hundreds of thousands of dollars from Arrow-Med’s bank accounts to their own use.

According to the complaint, from September 2012 to August 2015, Arrow-Med transported patients, who had no medical need for an ambulance transport, to dialysis clinics and to other medical appointments. Under federal law, Medicare pays for non-emergency ambulance transports only if the patient’s condition is such that taking other forms of transportation would endanger the patient’s health.

The complaint provides examples of unnecessary non-emergency ambulance transports provided to patients who rode in the front seat of the ambulance or to patients who walked a half-mile daily for exercise.

The complaint alleges the defendants caused damages to Medicare and Medicaid in excess of a million dollars. Under the False Claims Act, if the defendants are found liable at trial, they would be responsible for paying three times the amount of loss proven at trial, plus additional penalties of $5,000 to $10,000 for each false claim.

The litigation against Arrow-Med was initiated by Darrell Stephen McIntosh, who filed a complaint against Arrow-Med pursuant to the whistleblower provisions of the False Claims Act in April 2015. The United States’ Complaint in Intervention reflects the government’s intent to pursue allegations of fraudulent claims for medically unnecessary services against the defendants.

The investigation was conducted by the U.S. Department of Health and Human Services, Office of Inspector General, and the Office of the Kentucky Attorney General’s Medicaid Fraud and Abuse Control Unit. Assistant U.S. Attorneys Daniel Hancock and Paul McCaffrey are litigating this case on behalf of the federal government.