$14M Medicaid fraud scheme collected urine samples from Charlotte-area kids, feds say [The Charlotte Observer]

Charlotte Observer (NC)

A Greensboro businessman pleaded guilty on Tuesday for his role in a sweeping urine-testing conspiracy in Charlotte and across the state that defrauded North Carolina's Medicaid program out of some $14 million.

Newly filed documents in the case allege that Richard Graves, 49, was among a list of named and unnamed co-conspirators who paid millions in kickbacks in exchange for urine samples collected from at-risk children -- including some from Charlotte after-school programs -- and other Medicaid-eligible beneficiaries.

Those samples were funneled to United Diagnostic Laboratories and United Youth Care Services, two Greensboro companies where Graves worked and which used the samples to file for millions in Medicaid reimbursements for medically unnecessary drug tests, according to court documents unsealed on Tuesday.

Prosecutors say the scheme ran between 2016 and 2020. The investigation, which involved the FBI, the Internal Revenue Service and the N.C. Attorney General's Office, continues.

In all, the conspirators bilked $14 million from the state's Medicaid program, documents allege. Graves and others used $2.5 million of the reimbursement windfall to pay kickbacks to their partners who recruited those who supplied the urine.

On Tuesday, Graves pleaded guilty to conspiracy to commit health care fraud and money-laundering conspiracy. He faces a combined maximum punishment of up to 25 years in prison and a $750,000 fine.

His attorney, Miranda Mills of Charlotte, did not respond to an Observer email Tuesday seeking comment.

Medicaid fraud steals billions from taxpayers every year while often subjecting patients to the risks of unnecessary procedures. In 2015 alone, improper Medicare payments -- including unnecessary treatment or services that were billed but never provided -- totaled more than $29 billion according to the federal Government Accountability Office.

Several of Graves' partners had Charlotte ties. They include Markuetric Stringfellow, who is now serving a 6 1/2-year federal prison sentence for operating Medicaid-reimbursement scams in both Carolinas. Stringfellow also has been ordered to pay $5 million in restitution, including $700,000 to the S.C. Medicaid program.

According to documents in the North Carolina case, Stringfellow owned Do it 4 The Hood, which ran after-school programs in Charlotte, Greensboro Winston-Salem and Rocky Mount and which was headquartered in a home in Piper Glen.

Young people participating in the programs were required to submit urine samples for drug tests. Prosecutors say Stringfellow used the samples to barter kickbacks from the Greensboro companies.

Another Stringfellow-owned company, identified in court documents as "Everlasting Vitality," helped launder the scammed money by filing invoices for fraudulent services and billing hours, prosecutors say. In return the company also was paid kickbacks by Graves and others.

Other Charlotte-based co-conspirators remain unidentified in court documents, indicating that the investigation remains open. They include:

An unnamed organization in Charlotte and its owner who provided subsidized housing to tenants while requiring them to submit urine samples. According to documents, the owner received kickbacks from at least one of the Greensboro companies.

The unidentified owner of the two Greensboro companies who, according to prosecutors, lived in Charlotte and Greensboro, and helped funnel kickbacks the fellow conspirators.

The Graves case is the second in the Charlotte-area within the past year involving massive drug-testing fraud by a lab.

In March, the principals of Physicians Choice Laboratory Services of Rock Hill, formerly of Charlotte, agreed to pay millions in fines to the federal government. Their crime: Doling out bribes and kickbacks to collect urine samples for unnecessary tests, which they used to collect reimbursements from Medicare, the massive federal health-insurance program for seniors.