Paducah Woman Indicted for Health Care Fraud
Former VP of HealthEssentials Solutions, Inc. Charged with Submitting False and Fraudulent Billings to Medicare in a Scheme to Defraud

LOUISVILLE, KY—Acting U.S. Attorney Candace G. Hill of the Western District of Kentucky announced today that a federal grand jury in Louisville returned an indictment on April 22, 2009, against Karen Stone, age 49, of Paducah, Kentucky, on charges of  Health Care Fraud.

The Indictment alleges that between 2001 through 2004, Stone, while employed as the business manager for HealthEssentials, caused the corporation to submit false and fraudulent billings. As a result, Stone also caused the corporation to commit wire fraud and health care fraud. 

HealthEssentials Solutions, Inc. (“HealthEssentials”) was a former Kentucky-based nationwide provider of geriatric care. HealthEssentials generally provided two types of healthcare services to Medicare beneficiaries, which comprised the bulk of the defendant company’s revenues: (1) primary care provided by nurse practitioners to geriatric patients in non-acute, residential settings such as nursing facilities, homes, and facilities deemed to be assisted living facilities (“ALFs”) for purposes of Medicare reimbursement (hereinafter the “Nurse Practitioner Business”), and (2) general home health care services (hereinafter the “Home Health Business”). Between 1999 through 2005, HealthEssentials was a healthcare provider in the Medicare program. As a Medicare provider, HealthEssentials agreed to submit claims to Medicare that were not false or otherwise fraudulent.  HealthEssentials’ Nurse Practitioner Business billed Medicare primarily for Evaluation and Management (“E&M”) services by using billing codes based on the American Medical Association’s Current Procedural Terminology coding system (“CPT”). The CPT code groups most frequently used by HealthEssentials’ Nurse Practitioner Business were location-specific. Thus, the defendant company’s personnel had to select the CPT code from the group that accurately reflected the location where the Nurse Practitioner Business services were being provided.

Medicare reimbursement for evaluation and management services provided in a patient’s home using CPT codes 99341 - 99350 was generally higher than reimbursement for comparable services provided in an ALF (CPT domiciliary codes 99321 - 99333) or a nursing facility (99301 - 99313) which provided increased revenue to the business. As a part of the scheme to defraud, Stone directed that the employees submit claims for the higher paying ALF codes. This caused an estimated total loss to the program of  $3,105,931.

In the event of a conviction, the maximum potential penalties are 35 years' imprisonment, a $750,000 fine, and supervised release for a period of up to three years.

The case is being prosecuted by Assistant United States Attorney Lettricea Jefferson-Webb and Benjamin Schecter, and it was investigated by the Health and Human Services, Office of the Inspector General, Federal Bureau of Investigation, and Department of Defense, Office of Inspector General.

Stone is scheduled to appear for arraignment before the United States Magistrate Judge on May 19, 2009, at 9:30 a.m., in Louisville, Kentucky.

The indictment of a person by a Grand Jury is an accusation only and that person is presumed innocent until and unless proven guilty. 

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