Charlote Woman Sentenced To 5 Years In Prison For $650,000 Medicaid Fraud Scheme

CHARLOTTE, N.C. – Chief U.S. District Court Judge Frank D. Whitney sentenced a Charlotte woman on Tuesday, June 18, 2103, to serve 60 months in prison and two years under court supervision for defrauding Medicaid of $650,000, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Charlotte Elizabeth Garnes, 39, of Charlotte, was also ordered to pay $792,184.52 in restitution.

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.

In sentencing the defendant, Judge Whitney emphasized that the crime had numerous victims, including not only the federal and state governments who fund Medicaid, but also the children and patients whose names and identities were stolen. Judge Whitney observed, “Now they have medical records out there that are outright fraudulent” and noted that the defendant and her co-conspirators not only stole from the taxpayers “but also harm[ed] young men and young women.”

In February 2013, a Charlotte jury convicted Garnes of health care fraud conspiracy, obstruction of official proceedings and false statements relating to health care matters. According to evidence presented at trial and yesterday’s sentencing hearing, Garnes was a Licensed Professional Counselor approved by Medicaid to provide mental and behavioral health services to qualified individuals. Trial evidence established that Garnes claimed to have personally provided mental health services to Medicaid recipients when in fact she did not. Evidence showed that Garnes conspired with others to permit unqualified individuals to submit claims to Medicaid under Garnes’ Medicaid number for therapy services purportedly provided by those individuals. In reality, most of the services were never provided. At Garnes’ trial numerous Medicaid recipients or their parents testified that they or their children never received the therapy services Garnes claimed to have provided.

According to trial evidence, Garnes kept 30% of the paid out Medicaid reimbursements and distributed the remainder to her co-conspirators. From March 2009 to April 2011, Medicaid paid Garnes 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 for many of the claimed dates of services Garnes was outside of the country, including in Germany, working on a government contract. The evidence also established that Garnes routinely billed for more than 24 hours of therapy services in a single day, including providing 69 hours of individual therapy services in a single day in December 2009.

Trial evidence demonstrated that Garnes used the fraud proceeds to purchase a Mercedes-Benz vehicle and plastic surgery.

In making today’s announcement, U.S. Attorney Tompkins stated, “Garnes’ first mistake was to steal from Medicaid. Her second mistake was to think she would not get caught. Today’s sentence is a stark warning to those who believe that committing healthcare fraud will not land them in prison. Our District’s Health Care Fraud Task Force consists of a team of determined prosecutors and investigators committed to going after anyone who steals money from taxpayer supported programs put in place to cover the medical needs of needy North Carolinians.”

“Our attorneys and investigators are working closely with our federal partners to find Medicaid violators and make them pay,” Attorney General Roy Cooper said. “Medicaid fraud wastes taxpayers’ money, squanders funds that should go to needed care, and drives up health care costs for everyone. Cases like this one will help discourage other health care providers from cheating.”

Following the sentencing hearing, Garnes was remanded to the custody of the U.S. Marshals Service. She will be transferred into the custody of the Federal Bureau of Prisons upon designation of a federal facility. Federal sentences are served without the possibility of parole.

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.