Behavioral health fraud perpetrators plead guilty to $1M Medicaid scheme

Two men, who created and managed a company that provided mental health care to Medicaid patients and collected over $1 million in Medicaid payments, pleaded guilty to conspiracy to commit health care fraud. The president of Coastal Bay Behavioral Health, Inc. (Coastal Bay) acknowledged in the plea agreements that the other participant was an “excluded provider,” who was prohibited from billing federal health care programs due to a 2011 conviction for health care fraud. Each man faces a maximum penalty of five years in prison and a fine of up to $250,000.

Although the president was aware that he was employing an excluded provider, he did not disclose this fact to the state Medicaid program. Using an alias, the provider performed a variety of functions, including hiring and firing individuals, seeing patients, and performing other managerial tasks. Coastal Bay received $1.2 million in reimbursements from Medicaid because of the provider’s alleged fraud, according to court papers.

The provider and his family received significant financial benefits due to his involvement in Coastal Bay. Specifically, the provider had access to a Coastal Bay credit card, which he used to make routine purchases at restaurants, furniture stores, gas stations, and other places in North Carolina, even though Coastal Bay had no operations in North Carolina. In addition, the provider and his immediate family received more than $10,000 in direct payment withdrawals from the Coastal Bay business account.