North Carolina Family Sentenced in Multimillion Dollar South Carolina Medicaid Scheme
Columbia, South Carolina – Acting United States Attorney M. Rhett DeHart announced today that Tony Lee Covington, 50, his wife Priscilla Covington, 51, and his sisters Vanessa McPhaul, 56, and Mary Moses Covington, 51, all of Raeford, North Carolina, were sentenced for conspiracy to commit wire fraud in a scheme to defraud South Carolina Medicaid of over $3.6 million.
According to evidence presented during the defendants’ guilty plea and sentencing hearings, the family members founded two companies, Preferred Care Incorporated and Saving Grace Outreach. The two companies claimed to provide rehabilitative behavioral health services to disabled, low-income individuals in South Carolina through the Medicaid program. Instead, between 2014 and 2016, the companies billed South Carolina Medicaid millions of dollars for “crisis intervention,” a service offered to individuals experiencing extreme emotional distress like suicidal thoughts or mental breakdowns.
During the hearings, the government indicated that despite the companies having fewer than 20 clients, they billed more in total for crisis intervention services than the entire South Carolina Department of Mental Health. Clients contacted by investigators indicated that while they had received some services from the companies, they never received any crisis intervention. Evidence in the case indicated that the services provided by the companies should have been billed at approximately $9.00 an hour, but by billing the services as crisis intervention, the companies were instead paid $67.88 per hour.
Although Medicaid instituted an audit of Preferred Care once the irregular billing was discovered, the family immediately started Saving Grace Outreach to continue the fraudulent billing practices.
“Stealing from agencies that serve those in distress is shameful, and illegal,” said Acting U.S. Attorney DeHart. “This office worked with our partners in the South Carolina Attorney General’s Office to not only prosecute these defendants, but to put a stop to their illegal practices.”
“This case shows the great working relationship between our office and the U.S. Attorney’s Office and illustrates how we use that cooperation to hold criminals accountable,” South Carolina Attorney General Alan Wilson said. “This Medicaid Fraud Scheme enabled providers to steal millions of dollars from taxpayers, which means there’s less money available for people who actually need medical care.”
United States District Judge Mary Lewis sentenced Tony Covington to 51 months in federal prison, Priscilla Covington to 39 months in federal prison, Mary Covington Moses to 33 months in federal prison, and Vanessa Covington McPhaul to 33 months in federal prison. There is no parole in the federal system. All defendants were given a three-year term of court-ordered supervision and ordered to repay $3,647,094.83 in restitution to South Carolina Medicaid.
The case was investigated by the United States Department of Health and Human Services (HHS) and South Carolina Attorney General’s Office.
Assistant United States Attorney T. DeWayne Pearson prosecuted the case.
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Derek Shoemake (843) 813-0982