East Helena Woman Sentenced to Five Years in Prison for Health Care Fraud and Tax Evasion

HELENA – Elizabeth Jones Powell, 52, of East Helena, Montana, was sentenced today to five years imprisonment and three years supervised release for health care fraud and tax evasion.  She was also ordered to pay $420,891.08 to four insurers and $43,514 to the Internal Revenue Service.  U.S. District Court Judge Sam E. Haddon presided over the sentencing. 

In court documents, federal prosecutor Chad Spraker wrote that in 2012, the Montana Surveillance and Utilization Review Section (SURS) noticed irregularities in physical therapist Gordon Jones practice’s billing to Medicaid.  In particular, from June 2009 to July 2012, Medicaid received claims for only five Medicaid beneficiaries:  Powell, her husband, and their three children.  The practice was also billing for services nearly seven days a week.

After observing the irregularities, SURS requested documents from the practice in April 2012 to support its claims.  SURS did not receive a response, so it made another request for documentation in June 2012.  SURS received documents in response to the second request, though not an adequate one.  In particular, SURS noted the records contained duplicate wording and consistent misspellings across patient files; the records failed to include dates of service one would expect in the records; the records appeared to be signed by someone other than Jones; and the records contained no written referrals for physical therapy.

A DCI Agent conducted surveillance on Jones’s business and residence for several days in August 2012 to determine whether any beneficiaries were visiting the practice.  Medicaid later received claims on those dates for one of Powell’s children who was at work at the time.  State authorities executed a search warrant on Jones’ business and residence in April 2013.  During the search, officers seized a computer showing that Medicaid patient files for the Powell family were created shortly after the SURS request.  

The agent interviewed the family members for which the practice billed Medicaid.  Claims for one of Powell’s children were billed for 233 days in 2009 and 2010 when in reality she had been to physical therapy approximately five times in her entire life.  Prior to and interview with Powell’s child, Powell called and attempted to persuade her that she received multiple physical therapy treatments from Gordon because she had hurt her neck after falling off a riding lawn mower. 

The Powell family was categorically ineligible to receive Medicaid from October 2009 to May 2013, due to the misrepresentations and omissions Powell made on their eligibility paperwork.  In addition to $290,476 in fraudulent Medicaid claims made through Gordon’s practice, the family received treatment from 63 other medical providers resulting in a $25,664 loss to Medicaid.  The Powell family also received 63 different medications resulting in an $18,343 loss to Medicaid. 

Powell also filed several false tax returns during her health care fraud scheme.  From 2010 through 2012, Powell filed IRS Forms 1099 that substantially understated her income.  According to Powell’s accountant, each year Powell provided him with figures stating the amount of income Powell received from the physical therapy practice, which the accountant then listed on Powell’s return to the IRS.  After Powell’s fraud came to light, Gordon and his son provided the accountant with a spreadsheet detailing the additional funds Powell took from the practice.  The accountant then issued Powell amended Forms 1099 listing the additional income.  Powell did not file an amended return reflecting that income.

The U.S. Attorney’s Office conducted a separate review of Gordon’s bank account and computed the monies Powell diverted from the bank account for her own benefit.  The analysis also revealed insurance checks Powell diverted from the practice and deposited into bank accounts Gordon had no control over.  Further, Powell transferred funds from Gordon’s account to bank accounts held in the names of her children before spending the money.

This case was prosecuted by Assistant U.S. Attorney Chad C. Spraker and investigated by the Montana Division of Criminal Investigation and the Internal Revenue Service Criminal Investigation Division.