Company And Its Majority Shareholder Allegedly Stole More Than $2M From Medicaid Using Customers’ Medicaid Identification Numbers
(Long Island, NY) Attorney General Eric T. Schneiderman announced today the arrest and arraignment of Bennett Surgical Supply, Inc. and its majority shareholder, Katia Donnelly, on a fifty-count indictment for allegedly submitting thousands of false claims to Medicaid. As a result, Medicaid paid more than two million dollars over six and a half years, according to the charges. Donnelly is alleged to have used the Medicaid identification numbers of her customers to fraudulently bill for items she never purchased or delivered to them. In addition to being charged with Grand Larceny in the First Degree, the defendants are also charged with seventeen counts of Offering a False Instrument for Filing in the First Degree and sixteen counts each of Criminal Possession of a Forged Instrument in the Second Degree and Falsifying Business Records in the First Degree. If convicted, Donnelly faces up to 8 1/3 to 25 Years in State Prison.
The Attorney General’s investigation revealed that during the period from January 1, 2006 through June 30, 2012, Katia Donnelly was the operator and 51% owner of Bennett Surgical Supply, Inc., a now defunct durable medical equipment vendor located at 382 New York Avenue, Huntington, New York. During that period, Donnelly allegedly falsified thousands of claims to Medicaid causing the program to pay Bennett more than two million dollars for dispensing durable medical equipment and supplies that it had never possessed, that were not medically necessary, that its customers’ medical professionals never ordered, and that its customers in fact never received. The vast majority of those alleged bogus claims were for specialty wound dressings, ostomy supplies, custom orthotics and even high priced hospital beds. In fact, Bennett was the highest biller statewide for at least thirteen DME procedure codes, including eight wound dressing codes, three ostomy supply codes, one bariatric hospital bed code and one pressure reducing mattress code.
“Stealing from Medicaid drains resources from a program that is designed to help some of our most vulnerable members of society,” said Attorney General Schneiderman. “Our message is simple: no matter how elaborate or complex the scheme, we will root out Medicaid fraud and punish those responsible.”
Donnelly also allegedly falsified hundreds of records contained in Bennett’s customer files, including Official New York State Prescriptions, to make it appear that physicians and a physician assistant had ordered wound dressings and other items for their patients. In reality, the prescriptions were forged and the doctors had never heard of the patients for whom the prescriptions were written. In addition, the investigation uncovered that after Bennett received legitimate physician orders, they were subsequently altered by the addition of items that were never ordered by the physicians or needed by or delivered to their patients.
It is also charged that Donnelly also falsified Bennett’s books and records to make it appear that she purchased and paid for inventory that she billed Medicaid for dispensing to her customers. A review of her suppliers’ records and Bennett’s bank account records revealed that she never purchased the two million dollars’ worth of inventory she claimed to have dispensed to Medicaid recipients and that the checks that she recorded as paying suppliers for that inventory were, in fact, used to pay her personal expenses such as a time share in the Dominican Republic which she visited frequently, a car loan and numerous credit cards used for travel and on-line shopping, among other things.
The arraignment on the indictment was conducted by Supreme Court Justice John B. Collins. Donnelly is being held on $500,000 cash bail with a $2 million bond alternative.
The Attorney General thanks the New York State Office of the Medicaid Inspector General for referring this matter to his Office for investigation and prosecution.
The charges against the defendants are accusations and the defendants are presumed innocent unless and until proven guilty.
The investigation was conducted by Investigator Stephen Clarke of the Attorney General’s Medicaid Fraud Control Unit (MFCU) Long Island Regional Office, with the assistance of Supervising Investigator Greg Muroff. The Deputy Chief Investigator-Downstate for MFCU is Kenneth Morgan. The audit investigation was conducted by Principal Auditor Investigator Mary Gail Kowtna. Kathleen Yoos is the Regional Chief Auditor.
This case was handled by Special Assistant Attorney General Veronica Bindrim-MacDevitt. Jane Zwirn-Turkin is the Regional Director of the MFCU Hauppauge Regional Office. The Medicaid Fraud Control Unit is led by Director Amy Held and Assistant Deputy Attorney General Paul Mahoney. The Criminal Justice Division is led by Kelly Donovan.