Familial Fraud

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Surgeon picking up surgical tool from tray. Surgeon is preparing for surgery in operating room. He is in a hospital.

Families often have very strong bonds. So strong that some family members are willing to go to great lengths to conceal dysfunction. Today, we take a look at a North Carolina family who bonded together over greed and the $3.6 million they collected by carrying out a multimillion-dollar Medicaid fraud scheme.

Tony Lee Covington, 50, his wife Priscilla Covington, 51, and his sisters Vanessa McPhaul, 56, and Mary Moses Covington, 51, all of Raeford, N.C., founded two companies to carry out their ruse. (Perhaps they were all having a mid-life crisis.) Preferred Care Incorporated and Saving Grace Outreach claimed to provide rehabilitative behavioral health services through the South Carolina Medicaid program for disabled and low-income individuals. (What really happened is somewhat different.)

Between 2014 and 2016, both companies billed the South Carolina Medicaid program millions of dollars for crisis intervention services. (These services are available for individuals who are experiencing emotional stress, including suicidal thoughts or mental breakdowns.) While both companies had less than 20 clients, it’s ironic that together, they billed more for crisis intervention services than the entire South Carolina Department of Mental Health. (I’m sure that sent up a red flag.)

When interviewed by investigators, clients admitted that they had received some services from the two companies; however, they claimed they had never received any services related to crisis intervention. (The Covington family billed $9 per hour for regular services, but they knew they could get $67.88 per hour for crisis intervention services.)

When Medicaid audited Preferred Care after the irregular billing practices were discovered, the Covington family immediately formed Saving Grace Outreach to continue their fraudulent billing scheme. (As I mentioned, family members can sometimes go to great lengths to protect dysfunctional, or in this case, fraudulent behavior.) 

Prison sentences were handed down to all four family members as follows: Tony Covington, 51 months; Priscilla Covington, 39 months; Mary Covington Moses, 33 months; and Vanessa Covington McPhaul, 33 months. The four fraudsters were also given a three-year term of court-ordered supervision for committing Medicaid fraud and they must also repay $3,647,094.83 in restitution to South Carolina’s Medicaid program. (Kudos to multiple law enforcement agencies for stopping this family from stealing millions of dollars from taxpayers and benefits from those who actually need medical care.)

Today’s Fraud of the Day comes from a Department of Justice press release, “North Carolina Family Sentenced in Multimillion Dollar South Carolina Medicaid Scheme,” dated November 9, 2021.

Columbia, South Carolina – Acting United States Attorney M. Rhett DeHart announced today that Tony Lee Covington, 50, his wife Priscilla Covington, 51, and his sisters Vanessa McPhaul, 56, and Mary Moses Covington, 51, all of Raeford, North Carolina, were sentenced for conspiracy to commit wire fraud in a scheme to defraud South Carolina Medicaid of over $3.6 million.

According to evidence presented during the defendants’ guilty plea and sentencing hearings, the family members founded two companies, Preferred Care Incorporated and Saving Grace Outreach. The two companies claimed to provide rehabilitative behavioral health services to disabled, low-income individuals in South Carolina through the Medicaid program. Instead, between 2014 and 2016, the companies billed South Carolina Medicaid millions of dollars for “crisis intervention,” a service offered to individuals experiencing extreme emotional distress like suicidal thoughts or mental breakdowns.

 

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Larry Benson, Senior Director of Strategic Alliances, LexisNexis Risk Solutions - Government

Larry Benson is responsible for developing strategic partnerships and solutions for the government vertical. His expertise focuses on how government programs are defrauded by criminal groups, and the approaches necessary to prevent them from succeeding.

Mr. Benson has 30 years of experience in sales and business development. Before joining LexisNexis® Risk Solutions, he spent 12 years founding and managing two software technology startups. During the 1990s he spent 10 years as a Regional Director helping to grow a New England-based technology company from 300 employees to 7,000. He started his career with Martin Marietta Aerospace working on laser guided weapons and day/night vision systems.

A sought-after speaker and accomplished writer, Mr. Benson is the principal author of “Fraud of the Day,” a website dedicated to educating government officials about how criminals are defrauding government programs. He has co-authored WTF? Where’s the Fraud? How to Unmask and Stop Identity Fraud’s Drain on Our Government, and Data Personified, How Fraud is Changing the Meaning of Identity.

Benson holds a Bachelor of Science in Physics from Albright College, and earned two graduate degrees – a Master of Business Administration from Florida Institute of Technology, and a Master of Science in Engineering from Lehigh University.