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Press Release

Gate City Transportation Sentenced For Health Care Fraud

For Immediate Release
U.S. Attorney's Office, Middle District of North Carolina
Over $5 Million in Restitution Ordered

WINSTON-SALEM, N.C. - A Greensboro-based medical transport company was sentenced today in federal court for health care fraud, announced United States Attorney Matthew G.T. Martin of the Middle District of North Carolina and North Carolina Attorney General Josh Stein.

GATE CITY TRANSPORTATION, INC. was ordered to pay a $100 fine, a $400 special assessment, and restitution in the amount of $5,245,640.02 to the N.C. Fund for Medical Assistance by United States District Court Judge Loretta Copeland Biggs of the Middle District of North Carolina. The defendant corporation pleaded guilty to one count of health care fraud in October 2018.

“Fraud does not pay in the long run. With today’s judgment, taxpayers will get back over $5M that was taken from Medicaid,” said U.S. Attorney Martin, “This case demonstrates how agencies work together to find and stop healthcare fraud. I commend the IRS, the U.S. Department of Health and Human Services, and the NC AG’s office for their excellent work.”

“Corporations that defraud the Medicaid program are cheating taxpayers and taking away resources from people who need health care,” said Attorney General Josh Stein. “My office will continue to fight health care fraud and waste.”

In April 2008, GATE CITY TRANSPORTATION enrolled with the North Carolina Medicaid Program as an ambulance provider. Initially, GATE CITY TRANSPORTATION owned and operated convalescent ambulances. Convalescent ambulance services are used to provide non-emergency medical transportation to stretcher-bound patients.

From November 2010 until February 2015, GATE CITY TRANSPORTATION stopped operating convalescent ambulances and provided non-emergency transport to ambulatory and wheelchair bound clients using vans. The majority of GATE CITY TRANSPORTATION’s clients were Medicaid recipients. Medicaid did not directly reimburse companies for providing van transportation. GATE CITY TRANSPORTATION could have applied to the county Division of Social Services (DSS) for approval to provide non-emergency medical van transportation to ambulatory and wheelchair bound clients, but did not do so.

Despite providing van transportation, GATE CITY TRANSPORTATION continued to submit claims to Medicaid using ambulance codes which were reimbursed at a higher rate. GATE CITY TRANSPORTATION was deliberately ignorant to the false claims because it wanted to continue receiving the higher reimbursement rate. The false claims caused the Medicaid program to suffer a loss of over five million dollars.

During the investigation of GATE CITY TRANSPORTATION, law enforcement seized and forfeited more than $5 million in cash and property representing proceeds of the scheme. Federal authorities will request authorization to apply the forfeited funds toward restitution.

The case was investigated by the Internal Revenue Service-Criminal Investigations, the U.S. Department of Health and Human Services, and the North Carolina Attorney General’s Medicaid Investigations Unit. The case was prosecuted by former Assistant United States Attorney Robert M. Hamilton and Assistant United States Attorney Lisa B. Boggs.


Updated August 15, 2019