Charlotte Jury Convicts Woman in $650,000 Medicaid Fraud Scheme

Ninety Percent of the Defendant’s Claims for Mental and Behavioral Health Services Were Fraudulent

CHARLOTTE, N.C. – A federal jury sitting in Charlotte convicted a Charlotte woman late Friday, February 8, 2013 of defrauding Medicaid of at least $650,000, obstructing an official proceeding and making false statements in connection with a health care matter, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina.

U.S. Attorney Tompkins is joined in making today’s announcement by Attorney General Roy Cooper, who oversees the North Carolina Medicaid Investigations Division (MID), and Derrick Jackson, Special Agent in Charge, Department of Health and Human Services, Office of the Inspector General (HHS-OIG), Office of Investigations, Atlanta Region.

Charlotte Elizabeth Garnes, 37, of Charlotte was convicted following a weeklong trial before U.S. District Court Judge Frank D. Whitney. According to evidence presented at trial, Garnes was a Licensed Professional Counselor and was approved by Medicaid to provide mental and behavioral health services to qualified individuals. The Government’s evidence showed that Garnes claimed to have personally provided mental health services to Medicaid recipients when in fact she did not. Instead, as evidence established, the defendant conspired with others – who were not licensed and not approved by Medicaid – to permit those unqualified individuals to submit claims to Medicaid under the Defendant’s provider number for therapy services purportedly provided by those individuals. In reality, most of the services were never provided.

According to evidence presented at trial, Garnes agreed with Teresa Marible, Michele Jackson (a/k/a Sylvia Jackson) and others to falsely put Garnes’ name and Medicaid provider number on claims for therapy services supposedly provided by the co-conspirators. The Government established that after Medicaid paid Garnes for these false claims, Garnes kept 30% of the fraud proceeds and distributed the remainder to her co-conspirators. From March 2009 to April 2011, Medicaid paid the Defendant and her company, Charlotte’s Insight, Inc., approximately $740,349 and approximately 90% of that amount ($666,062) was based upon false claims for services that Garnes did not provide.

During trial, the Government established that many of the claimed services were never provided at all. Numerous Medicaid recipients or their parents testified at trial that they or their children never received the therapy services that Garnes claimed to have provided. For many of the claimed dates of services Garnes was not in North Carolina or in the country. In fact, the defendant billed Medicaid for therapy services she claimed to have provided while she was in Germany working on a government contract, all according to trial evidence. The evidence also established that Garnes routinely billed for more than 24 hours of therapy services in a single day, including allegedly providing 69 hours of individual therapy services in a single day in December 2009.

Trial evidence demonstrated that the Defendant purchased a Mercedes vehicle and plastic surgery with the fraud proceeds.

Garnes, who was convicted on all twelve counts charged in the indictment, has been released on bond. She faces a statutory maximum sentence of 10 years in prison and a $250,000 fine for count one. Count two carries a statutory maximum sentence of 20 years in prison and a $250,000 fine. Counts three through twelve carry a statutory maximum sentence of five years in prison and a $250,000 fine. A sentencing date for Garnes has not been set yet.

Teresa Marible was sentenced in June 2012 to serve 36 month in prison for her role in the scheme, and was ordered to pay $1,135,662 in restitution. Michele Jackson was sentenced in March 2012 to 15 months in prison and was ordered to pay $292,282 in restitution.

The investigation was handled by HHS-OIG and MID. The prosecution of the case is handled by Assistant U.S. Attorneys Kelli Ferry and Jenny Grus Sugar of the U.S. Attorney’s Charlotte Office.

The investigation and charges are the work of the Western District’s joint Health Care Fraud Task Force. The Task Force is multi-agency team of experienced federal and state investigators, working in conjunction with criminal and civil Assistant United States Attorneys, dedicated to identifying and prosecuting those who defraud the health care system, and reducing the potential for health care fraud in the future. The Task Force focuses on the coordination of cases, information sharing, identification of trends in health care fraud throughout the region, staffing of all whistle blower complaints, and the creation of investigative teams so that individual agencies may focus their unique areas of expertise on investigations. The Task Force builds upon existing partnerships between the agencies and its work reflects a heightened effort to reduce fraud and recover taxpayer dollars.

If you suspect Medicare or Medicaid fraud please report it by phone at 1-800-447- 8477 (1-800-HHS-TIPS), or E-Mail at HHSTips@oig.hhs.gov. To report Medicaid fraud in North Carolina, call the North Carolina Medicaid Investigations Division at 919-881-2320.