Feds uncover massive Medicaid fraud to tune of $6 million

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Crook threatened to kill witness. Judge slaps culprit with 20-year sentence.

3 NN Medicaid fraud image 2PITT COUNTY – The United States Attorney’s Office for the Eastern District of North Carolina announced this week in a Wilmington, N.C. federal court, that Terry Lamont Speller, 39, of Winterville, North Carolina, was sentenced to 240 months in federal prison and three years of supervised release following his prior guilty plea to Health Care Fraud, and Engaging in Monetary Transactions in Criminally Derived Property.

Spellers was also ordered to make restitution of almost $6 million to the victims of the offense, which included the North Carolina Medicaid program and a physician, whose name and identification number Speller used to commit the fraud.

Acting U.S. Attorney John Stuart Bruce stated, “Speller defrauded the taxpayer and attempted to intimidate a federal witness. The U.S. Attorney’s Office will vigorously prosecute those who steal from a program designed to help the


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less fortunate and those who try to subvert the justice system by threatening witnesses.”

Speller thought his clever scheme, which included billing for services never rendered, identity theft and a sham nonprofit was undetectable. He was clearly outwitted by law enforcement,” said Derrick L. Jackson, Special Agent in Charge of the U.S. Department of Health and Human Services Office of Inspector General in Atlanta. “Today, Speller received a bill for hard prison time and millions of dollars payable to U.S. taxpayers.”

Special Agent in Charge Thomas J. Holloman III of IRS Criminal Investigation said, “IRS, Criminal Investigation is committed to ‘following the money,’ in this case the taxpayer dollars purloined from the Medicaid system, and removing the financial incentive of crime.”

The Criminal Information to which Speller pleaded guilty provides that between 2010 and 2015, Speller was an individual doing business through various Outpatient Behavioral Health and Outpatient Health Service providers in Pitt County and surrounding areas within the Eastern District of North Carolina.

Through these providers, Speller recruited hundreds of Medicaid beneficiaries, mostly children, from various communities in Eastern North Carolina to receive alleged services compensable by Medicaid.

In 2010, North Carolina’s Division of Medical Assistance, which administers the Medicaid program in this state, began an investigation of one of Speller’s companies based upon allegations that the company was billing for services that were not actually rendered. The Division requested that Speller produce the underlying medical records to support the provider’s prior claims to Medicaid.

Speller did not provide records to support the services that were billed.

He was subsequently suspended from further participation in Medicaid programs, and the Division would have rejected further attempts by Speller to become a provider.

Count One of the Criminal Information alleged that Speller affiliated himself with various other providers that he, and others working with him, used to bill the Medicaid program for millions of dollars in fraudulent claims.

Count Two of the Criminal Information charged that Speller converted approximately $1 Million of the fraud proceeds into alleged loan payments to a third party. Despite investigation, however, no documentation was recovered to support the existence of the loans. The loan proceeds were then transferred back to Speller in cash.

Although Speller pleaded guilty, he contested numerous sentencing enhancements, resulting in a full day of testimony and argument before Senior United States District Judge James C. Fox.

At sentencing, the Government’s evidence showed that Speller began fraudulently billing the Medicaid program in 2010 in connection with a Medicaid provider he operated, known as Carter Behavior Health Services. The evidence showed that stacks of fraudulent medical records were generated to bill the government for fictitious services.

After learning of the fraud, North Carolina’s Division of Medical Assistance suspended the defendant’s company as a Medicaid provider. The evidence showed, however, that Speller continued to find ways to defraud the Medicaid program. Testimony at the sentencing hearing revealed that Speller used the names of other providers, some of which were operated through companies placed in the names of close family members, to continue to submit fraudulent claims.

Much of the testimony focused upon Speller’s involvement with a clinic known as the “Medical Office” which operated in Greenville, North Carolina. The evidence showed that Speller defrauded the Medicaid program by submitting an altered check to the program for the purposes of establishing a direct deposit into a bank account of an alleged nonprofit business operated by Speller, known as Distinct Advantage Behavior Health. After establishing this direct deposit, Speller and others fraudulently caused Medicaid to pay out some $4.9 million in funds.

Special Agents with North Carolina’s Medicaid Investigations Division, the United States Department of Health and Human Services Office of the Inspector General, and the Internal Revenue Service Criminal Investigation, executed search warrants at the Medical Office and Distinct Advantage Behavior Health in October of 2014. In a safe inside the defendant’s office, agents recovered the fraudulent check used by Speller to deceive the Medicaid program. Agents also found no medical records to support the $4.9 million paid into the defendant’s bank account.

Speller’s scheme was halted in May of 2015 when he threatened to kill a witness against him. Evidence at the sentencing hearing showed that when the witness indicated that they would testify against him, Speller drove the witness off of a roadway and displayed a firearm.

Speller was arrested shortly thereafter on a federal warrant, and has been in custody since that time.

The investigation of this case was conducted by agents of the North Carolina State Bureau of Investigation assigned to the Medicaid Investigations Division of the North Carolina Attorney General’s Office; The Internal Revenue Service – Criminal Investigation; and the United States Department of Health and Human Services Office of the Inspector General.

The investigation and prosecution of this matter is being handled in a partnership between the United States Attorney’s Office for the Eastern District of North Carolina and the Medicaid Investigations Division of the North Carolina Attorney General’s Office. Assistant United States Attorney William M. Gilmore of the Economic Crimes Division, and Special Assistant United States Attorney Daniel Spillman of the Medicaid Investigations Division of the North Carolina Attorney General’s Office, each represented the United States.

If you suspect Medicare fraud, please report it by phone at 1-800-447-8477.

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