A Conway mother and daughter are accused of fraudulently billing the Arkansas Medicaid Program for nearly $100,000 and fraudulently withdrawing more than $65,000 from the accounts of patients at a shuttered Faulkner County facility for the developmentally disabled.
The two now face multiple counts of Medicaid fraud and exploitation after a lengthy investigation by the Attorney General’s Medicaid Fraud Control Unit into My House Inc. of Mayflower.
Court documents filed Thursday in Faulkner County Circuit Court allege Kathy Koone Hall, 48, the former executive director, fraudulently billed the Arkansas Medicaid Program for $90,556 between 2012 and 2013. She’s also accused of using debit cards to fraudulently withdrawal $65,866.80 from multiple accounts established for beneficiaries of the facility.
Hall faces six counts of class C felony Medicaid fraud, nine counts of class B felony exploitation, three counts of class C felony exploitation and one count of class D felony failure to maintain records.
Hall’s daughter, 28-year-old Melanie Ray Koone McCarty, is accused of fraudulently billing the Medicaid program for $4,119.50 for falsifying case management notes. She is also accused of using debit cards to fraudulently withdrawal $800 from multiple accounts of My House beneficiaries.
Lack of Food, Proper Bedding
My House closed its doors May 31, 2013.
When new providers made contact with the patients at the facility, the circumstances described were less than ideal.
“…they found that the beneficiaries did not have cleaning supplies, nutritious food and some of them did not have beds large enough to sleep in,” the affidavit states.
To make matters worse, the new providers were unable to obtain financial compensation from Medicaid for the patients, because Hall pre-billed Medicaid for services not yet rendered.
“Though these recipients received daily in-home supportive care, in some cases Kathy Hall exhausted their Medicaid disbursements with over six months of service remaining to be performed under the contract,” the affidavit states. “Coupled with the transfer of care to other providers after the closure of My House Inc., the exhaustion of these funds prevented Medicaid from compensating the new healthcare providers, as My House Inc. had already collected the funds slated to be used for care throughout the entire year.
Pre-Billed Services
My House was a licensed provider of the Alternative Community Services Waiver Program, a part of the Arkansas Department of Human Services’ Division of Developmental Disabilities Services.
The program is designed for adults, ages 21-64, with developmental disabilities to provide an alternative to confining patients to a state hospital or human development center.
Contracts with the Medicaid program, in most cases, are renewed annually. A licensed provider is required to maintain:
- Copy of each client’s plan of care.
- Description of the service provided.
- Signature and title of the person rendering the service.
- The beneficiary’s signature or mark.
- The exact date(s) and time(s) of the service.
A review of documents by investigators revealed My House failed repeatedly in several of these areas.
The facility’s contract with the Arkansas Medicaid Program, as part of its rules and regulations, also states the program can only be billed after services are rendered. But investigators’ review of the facility’s documents show Hall pre-billed Medicaid for services, including some that were never rendered after the facility closed May 31, 2013.
Documents show there were six different patients at the facility, each with thousands of dollars in fraudulently billed services.
The investigation’s review of the facility’s financial records showed Medicaid payments were made to a My House account at U.S. Bank. Once deposited, the money was transferred to another account at U.S. Bank before they were transferred again to an account at Centennial Bank. All accounts were under the My House Inc. name, and Hall was the only authorized signee on the accounts.
“In some cases, the money was withdrawn in cash and in some cases through the use of a cashier’s check,” the affidavit states. “Kathy Hall had complete control of the money paid by Medicaid. The only signature found on any and all checks associated with these accounts was the signature of Kathy Hall.”
Investigators also reviewed billings submitted to the Medicaid program from Jan. 1, 2011 to My House’s closing date, and discovered the documents “did not conform to the Medicaid waiver program and the provider notes were not signed by the Medicaid beneficiary as required.”
Investigators also spoke with past employees, family members and some patients who claimed Hall was in charge of all operations and Medicaid contracts, payments, collections and billings at the facility.
Withdrawing of Thousands
Financial records show Hall withdrew $65,866.80 from the accounts of 10 different patients, including from two accounts of the same patients, at ATMs in Conway, Vilonia and Branson, Missouri.
The withdrawals were for as little as $30 and for as much as $400. The losses to the patients varied from $1,200 to $19,231. Overdraft charges, insufficient fund and late fees racked up another $1,878.
Investigators say Hall kept all ATM cards and check books for each beneficiary’s bank account, either in her possession or in a locked desk drawer. There were numerous withdrawals, but investigators found no receipts, records or documentation for what the money was used for.
In one case, investigators say Hall agreed to make the mortgage payment for one patient since she was in control of his bank account while he was at the facility, but the payment was never made.
“Even though Kathy Hall made withdrawals from the account totaling $1,960, she did not make timely mortgage payments and allowed his mortgage to be 18 months in arrears,” the affidavit states.
Investigators also found several checks written out to My House in the days just prior to the facility’s closing.
“Based on the conditions of the residents on June 1, 2013,” the affidavit states,” this money was not used for the benefit of the beneficiaries.”
Hall’s daughter, Melanie Ray Koone McCarty, is also accused of withdrawing $800 from the accounts of two patients, in two $400 transactions, in the days after My House closed.
A review of the ATM video, by investigators, revealed a woman in a white vehicle make the withdrawals. The person from the photograph was identified as McCarty by the Faulkner County sheriff’s office.
Falsifying Case Management Notes
Melanie McCarty was hired at My House as an assistant to the director in 2004.
Six years later, McCarty was promoted to case manager for the facility. The investigation’s review of her case management notes show McCarty claimed to meet with various patients and billed Medicaid for the meetings, but never completed the services.
The meetings were to have taken place at Work Force in Conway, an adult component of the Faulkner County Day School, which provides those with developmental disabilities a place to meet, interact and study with others. All visitors of the patients are required to sign in and out.
Investigators spoke with the Conway facility’s director who said the sign in and out policy is followed closely, and that “she and her employees are familiar with Melanie McCarty,, and after inquiring with staff, found that none of her employees ever remembered Melanie McCarty visiting any of the My House Inc. beneficiaries at Work Force,” the affidavit states.
Various case management notes were filled out by McCarty, claiming meetings at Work Force, between 2010 and 2012. The billings to Medicaid totaled $4,119.50.
According to Section 700 of the DDS Waiver Program, case managers are required to hold a bachelor’s degree in a human services related field, or have various types of extensive experience in the field. Investigators’ review of McCarty’s file showed no documentation that McCarty had a bachelor’s degree, previously worked as a case manager or received any training from a certified case manager.
McCarty and Hall were arrested Friday, and later released on $10,000 and $15,000 bonds. The two are due back in court Nov. 24 for arraignment in Faulkner County Circuit Court.