No Integrity

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To maintain the integrity of MaineCare, Maine’s Medicaid program, regular audits are performed to protect against fraud, waste and abuse. The healthcare program uses referrals, complaints from other state agencies, healthcare providers or members, and data analysis to detect patterns or trends that may indicate fraudulent actions. A former Freeport, Maine couple, who owned wheelchair van companies that transported disabled clients, was the subject of one of these random reviews. The audit not only revealed hundreds of thousands of dollars in Medicaid fraud, but also nearly $100,000 in tax fraud. (Not to mention that the fraudsters lacked integrity, but that’s certainly no surprise.)

The couple started out in the transportation business in 2000, when they opened a company offering services to wheelchair users. According to court documents, the Maine-based company operated legitimately until the end of 2009 when the company blatantly disregarded MaineCare billing rules. Interestingly enough, a second company was opened under the wife’s name one month later. (It became a MaineCare-approved provider despite the fact that false information was submitted on the application.) Both of these companies operated as one, which violates MaineCare rules.

The two companies purportedly operated out of the same Freeport, Maine location and shared operating expenses, employees, accountants, insurers and payroll providers. Several of the vans used by the wife’s company were leased from the husband’s company, but the husband managed both companies. (If the case had gone to trial, former employees were prepared to testify that nearly all their interactions involved the husband, not the wife.)

A routine audit performed by MaineCare in 2011 discovered that false statements were made on the application to become an approved provider. Auditors also found out that many of the riders referred by the wife’s company should not have been charged the wheelchair rate. Another audit of the couple’s tax returns over four years showed unreported income of more than $208,000 from the second company.

The 60-year-old man and his 55-year-old wife now of Elijah, Georgia, pleaded guilty to Medicaid fraud and tax fraud. The husband got a 30-month prison sentence, while the wife will serve three years of probation. They were ordered to pay restitution of $302,000 to MaineCare and $93,000 to the Internal Revenue Service. The couple has already paid $245,000 toward restitution. (Perhaps the first step toward learning what it means to have integrity.)

Today’s “Fraud of the Day” is based on an article, “Former Maine couple that ran wheelchair van companies sentenced for MaineCare fraud,” published by Bangor Daily News on January 27, 2019.  

A former Freeport couple that ran wheelchair van companies that transported clients with disabilities was sentenced Thursday in U.S. District Court in Portland for fraudulently billing MaineCare and filing false tax returns.

Robert Zuschlag, 60, and Kristen Zuschlag, 55, of Elijah, Georgia, were ordered to pay $302,000 in restitution to MaineCare and $93,000 to the Internal Revenue Service, according to the U.S. attorney’s office.

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Larry Benson
Larry Benson is currently the Director of Strategic Alliances for Revenue Discovery and Recovery at LexisNexis Risk Solutions. In this role, Benson is responsible for developing partnerships for the tax and revenue and child support enforcement verticals. He focuses on embedded companies that have a need for third-party analytics to enhance their current offerings.