PHOENIX – The Office of the Arizona Attorney General's Medicaid Fraud Control Unit (MCFU) is the top-performing unit in the nation in bringing criminal indictments according to data provided to the U.S. Department of Health and Human Services (HHS). The MCFU, housed in the Criminal Division of the Attorney General's Office (AGO), is also commonly referred to as the Health Care Fraud and Abuse (HCFA) section in Arizona. The AGO has consistently been recognized as one of the nation's top-performing MFCU's based on the number of per capita criminal indictments obtained for the year. This is the first time in the 36-year history of the AGO's HCFA Unit that the section has reached the top position on this metric.
Earlier this year, the HHS published its MFCU statistical summary for FY2020, which listed the number of indictments obtained by each of the nation’s 53 MFCU's (including District of Columbia, Puerto Rico, and U.S. Virgin Islands). Adjusting for differences in staff size, Arizona’s MCFU emerged as the most productive unit in the nation in obtaining criminal indictments. The rankings are determined by statistical data comparing the number of indictments produced by the number of staff members in each of the 53 Medicaid Fraud Control Units in the country.
"The Arizona Attorney General's Office is a shining example nationwide for prosecuting criminals who commit Medicaid fraud against the government," said Attorney General Mark Brnovich. “Since 2015, our dedicated team has been among the top productive units in the country in terms of bringing criminal charges against those that commit Medicaid fraud and abuse patients cared for in Medicaid-funded facilities and has returned millions of dollars to taxpayers.”
In FY2020, Arizona's MCFU initiated 250 investigations and indicted 95 individuals; 81 for fraud and 14 for abuse/neglect. Also during the same year, 56 individuals were convicted; 48 for fraud and 8 for abuse/neglect, according to statistical data. The AGO's 26 HCFA employees were able to recover $15,525,961 in fraudulent funds that were returned to the government.
MCFU is a federally funded unit charged with investigating and prosecuting Medicaid (AHCCCS) fraud, fraud in the administration of the Medicaid program, abuse, and neglect or financial exploitation occurring in Medicaid facilities or committed by Medicaid providers or their employees.
During this past year, HCFA continued to partner with other law enforcement agencies engaged in investigating prescription drug crimes, including the United States Drug Enforcement Administration (DEA), Health and Human Services Office of Inspector General (HHS-OIG), the Federal Bureau of Investigations (FBI), and numerous municipal law enforcement agencies.
In addition to working collaboratively with federal and local law enforcement agencies, HCFA regularly receives referrals from the State's Medicaid agency - AHCCCS OIG - as well as the state health care licensing agencies. The referrals have led to the filing of criminal charges against licensed health care professionals engaging in illegal drug diversion in Arizona.
Recent examples of AGO HCFA cases:
State v. William Timmons & Joseph O’Malley; Hacienda Healthcare - A Medicaid fraud investigation initiated by special agents assigned to HCFA and supported by AHCCCS OIG and the Department of Economic Security (DES), alleged that William Timmons and Joseph O’Malley, former officers with Hacienda Healthcare, improperly allocated direct and indirect costs, inflated reported expenses, and engaged in improper billing during 2013 through 2018, resulting in an overpayment of at least $10,895,648 from AHCCCS to Hacienda. In June 2021, William Timmons pleaded guilty to two counts of Fraudulent Schemes and Artifices. A civil case settlement was reached in August 2020 which included the following stipulations:
- Hacienda agreed to repay AHCCCS an overpayment in the amount of $10,895,648.
- Hacienda was ordered to pay a $1.0 million fine to be allocated to the AGO and AHCCCS OIG.
State v. Rajeev Billing, MD - In January 2020, HCFA learned that the Arizona Medical Board had come into possession of a video that showed Scottsdale Psychiatrist Rajeev Billing, MD using cocaine in the presence of one of his patients. A search warrant of Dr. Billing’s residence was executed and relevant evidence was obtained. Dr. Billing was interviewed and he admitted to obtaining cocaine for his patient and personally ingesting cocaine, marijuana, and alcohol with his patient. Less than a month later, Dr. Billing was indicted on five felony offenses, Fraudulent Schemes and Artifices, Possession of Narcotic Drug, two counts of Possession of Dangerous Drugs, and Possession of Marijuana. In June 2020, Dr. Billing pleaded guilty to Possession of Narcotic Drugs. In August 2020, he was sentenced to 18 months of supervised probation. HCFA also submitted the case results to HHS-OIG to review this matter for excluding him from being allowed to bill for any Medicaid or Medicare services for five or more years. In October 2020, Dr. Billing surrendered his medical license to the Arizona Medical Board.
State v. Emma-Kaye Parrish - Special agents in the AGO’s Prescott office received a report from officers with the Prescott Valley Police Department. Officers reported that Emma-Kaye Parrish, who had been employed as a finance manager by a behavioral health facility in Yavapai County, was potentially committing fraud. One of her duties at the facility was paying vendors for goods and services rendered to this AHCCCS-funded facility. Although Parrish would input the information correctly into the facility’s financial program, thus indicating that the vendor had been paid, she would manually change the payee on the check to herself or to other entities for her personal expenses. Parrish was charged with Fraud Schemes and Artifices, two counts of Theft, Computer Tampering, and 47 counts of Theft of a Credit Card or Obtaining a Credit Card by Fraudulent Means. In July 2020, Parrish pleaded guilty to two counts of Theft and Forgery. She was later sentenced to three years in prison, followed by five years supervised probation. She was also ordered to pay restitution to the victim in the amount of $65,436.
State v. Heather Buhr & Isaac Butts - The AGO’s Task Force Against Senior Abuse (TASA) received an Adult Protective Service report alleging that an 84-year-old Sierra Vista woman had been the subject of financial exploitation. Special agents discovered that the victim was being cared for by a Medicaid-funded home health care assistance employee. The main suspect in the financial exploitation was caregiver Heather Buhr, who along with her father, Isaac Butts, received more than $30,000 in checks from the victim. In August 2020, Buhr and Butts were charged with Theft/ Financial Exploitation of a Vulnerable Adult. In January 2021, Buhr and Butts pleaded guilty to Amended Theft/Financial Exploitation of a Vulnerable Adult. They were sentenced to three years supervised probation and ordered to pay restitution of $33,520 to the victim.
State v. Michael Thomas DeArmond - In July 2016, Michael DeArmond had been convicted of Theft and was placed on supervised probation for a period of four years. In the 2016 case, DeArmond had submitted false timesheets for rehabilitation services he claimed to have provided to patients in the Kingman area which resulted in him being overpaid $22,000 in AHCCCS funds. In 2018, DeArmond was arrested for violating the terms of his probation stemming from his 2016 case. In May 2018, DeArmond was released from custody, over the State’s objection, with an order to return to the Mohave County jail by a specific date. When DeArmond failed to return, the charge of Escape in the Second Degree was filed in August 2018. In July 2020, DeArmond was sentenced to an additional 1.5 years in the Arizona Department of Corrections, Rehabilitation & Reentry in connection with his charge of Escape in the Second Degree. The Escape sentence will be served consecutive to the three years DeArmond is serving for the theft charge.
State v. Terri Lynn Rolston - Special agents in Prescott learned that Terri Lynn Rolston had embezzled $300,000 from the orthopedic office where she worked as an office manager for more than 11 years. In September 2018, Rolston was charged with Fraud Schemes, and Artifices and Forgery. In January 2021, Rolston was found guilty at trial of Fraudulent Schemes and Artifices and Forgery. She was later sentenced to one year in jail, followed by seven years of probation, and ordered to pay $304,602.36 in restitution to the victim.
State v. Melissa Pavey, et al - In April 2018, special agents arrested two Valley women who were alleged to have been performing unlicensed dental work on unsuspecting patients at their dental office in Glendale. The investigation revealed that neither of the women had ever been licensed as a dentist while they were alleged to have performed dental procedures, including tooth extractions utilizing drills, lasers, and surgical tools. In April 2018, they were charged with Fraudulent Schemes and Artifices, Aggravated Assault, Theft, and Taking Identity of Another. In May 2021, Melissa Pavey was convicted at trial. The jury returned verdicts of guilty for Fraud Schemes and Artifices, Aggravated Assault, Theft, Taking the Identity of Another, and three simple Assaults. She was sentenced to five years in prison followed by five years of supervised probation. Pavey’s co-defendant was previously sentenced.
If anyone believes they or someone they know has been the victim of or have information of Medicaid (AHCCCS) fraud, fraud in the administration of the Medicaid program, and abuse, neglect, or financial exploitation occurring in Medicaid-funded facilities or committed by Medicaid providers or their employee, they can fill out a complaint form here.