North Carolina Durable Medical Equipment Corporation Sentenced for $10 Million Healthcare Fraud Scheme, and the Company and Its Owner Agree to Pay Millions to Resolve Related Civil Claims
RALEIGH, N.C. – A North Carolina corporation was sentenced today to 5 years’ probation and ordered to pay a $2,000,000 fine in addition to paying $10,069,361.35 in restitution to the North Carolina Medicaid Program on a charge of Healthcare Fraud, in violation of Title 18, United States Code, Section 1347. The company and its owner have also agreed to pay millions to the United States and State of North Carolina to resolve related civil claims under the federal and state False Claims Acts. In that same civil action, the Governments have obtained a multi-million-dollar judgment against one of the company’s employees.
According to court documents, A Perfect Fit for You, Inc., was a durable medical equipment provider located in Morehead City, North Carolina, and owned by Margaret A. Gibson. Durable medical equipment includes items such as powered wheelchairs, orthotic braces, diabetic shoes, powered air flotation beds, osteogenesis stimulators, pneumatic compressors, etc. Between March 2015 and November 2016, one or more employees of A Perfect Fit for You submitted fraudulent billings claims to Medicaid for providing durable medical equipment to Medicaid recipients. These fraudulent claims contained the personal identifying information of Medicaid recipients who had never ordered nor received any durable medical equipment from A Perfect Fit for You. In fact, some of the patients had been deceased years before the false claims were even submitted. This scheme resulted in an estimated loss to Medicaid of approximately $10,069,361.35.
After appointment of a receiver, A Perfect Fit for You, Inc. self-reported suspected fraudulent activity to the North Carolina Medicaid Investigations Division. Thereafter, the company cooperated throughout the investigation.
On December 13, 2017, and based on the conduct described above, the United States and State of North Carolina filed a civil complaint under the federal and state False Claims Acts against A Perfect Fit for You, Inc. and Gibson, as well as one of the company’s employees, Shelley P. Bandy. The federal and North Carolina False Claims Acts mandate that the Governments recover triple the money falsely obtained, plus substantial civil penalties for each false claim submitted. To resolve those claims, the company has agreed to pay $20,138,722.70, while Gibson has agreed to pay $4,000,000. As for Bandy, the United States and State of North Carolina have obtained a $34,708,945.42 default judgment against her in the civil action. It should be noted that the civil claims against A Perfect Fit for You, Inc. and Gibson are allegations only and were resolved by settlement. There has been no judicial determination or admission of liability as to them in the civil case.
On December 29, 2020, Bandy pled guilty to making false statements relating to health care matters in violation of Title 18, United States Code, Section 1035. Bandy admitted to submitting fraudulent claims to Medicaid on behalf of A Perfect Fit for You, Inc. Bandy is scheduled to be sentenced later in March, 2021.
G. Norman Acker, III, Acting United States Attorney for the Eastern District of North Carolina made the announcement after sentencing by U.S. District Judge James C. Dever III. The investigation of this case was conducted by the North Carolina Department of Justice’s Medicaid Investigations Division (MID) and the United States Department of Health and Human Services Office of the Inspector General. Assistant United States Attorney William M. Gilmore is the prosecutor on the criminal case, while Assistant United States Attorney C. Michael Anderson represented the United States in the civil case. Special Deputy Attorneys General F. Edward Kirby, Jr. and Michael M. Berger, who also serve as a Special Assistant United States Attorneys, represented the United States and the State of North Carolina in the civil case.
The MID investigates and prosecutes health care providers that defraud the Medicaid program, patient abuse of Medicaid recipients, patient abuse of any patient in facilities that receive Medicaid funding, and misappropriation of any patients’ private funds in nursing homes that receive Medicaid funding. To report Medicaid fraud or patient abuse in North Carolina, call the MID at 919-881-2320.
The MID receives 75 percent of its funding from the U.S. Department of Health and Human Services under a grant award totaling $6,160,252 for Federal fiscal year (FY) 2020. The remaining 25 percent, totaling $2,053,414 for FY 2020, is funded by the State of North Carolina.