MOREHEAD CITY — A local woman owes the federal government and the state of North Carolina nearly $35 million due to medical fraud.
The civil case involved the U.S. and the state against A Perfect Fit For You Inc., a now-closed specialty bra and medical supply store that was located in the Plaza Shopping Center in Morehead City.
Margaret Gibson, former owner of the store, and Shelley Bandy, a sales representative, are also listed as defendants on court documents.
The case was decided in U.S. District Court for the Eastern District of North Carolina Nov. 15 by Judge James Dever in Raleigh. Judge Dever said in the default judgement Ms. Bandy owes $34,708,954.42, “because she knowingly caused false statements, caused false claims, and engaged in a fraudulent scheme to obtain federal funds.”
According to the Nov. 14 decision, Ms. Bandy “failed to appear in court, plead, or otherwise defend this action.” Court documents do not list any legal representation for Ms. Bandy.
Ms. Bandy, who lives in Morehead City, declined to comment.
The court found Ms. Bandy violated the False Claims Act by submitting hundreds of false claims to Medicaid and Medicare. The court document states she was the store’s primary salesperson, medical equipment fitter and Medicaid biller, and had “acted with actual knowledge, reckless disregard, or deliberate ignorance of the falsity of APF4Y’s (A Perfect Fit For You) Medicaid claims submissions for products APF4Y never provided to its Medicaid patients.”
The court document goes on to state multiple people interviewed all said Ms. Bandy was the individual responsible for submitting claims to Medicaid, and investigators found evidence, such as emails, to support the claims.
Investigators found Ms. Bandy had submitted claims for items never received by the listed Medicaid beneficiary, among other fraudulent acts. Ms. Bandy also admitted she had submitted claims listing billing codes she was unfamiliar with.
The court said between about March 5, 2015, and June 11, 2016, Medicaid paid A Perfect Fit For You $10,082,815.14 for 811 false claims comprised of 1,779 claim lines identified as part of the fraud scheme.
Because she violated the False Claims Act, Ms. Bandy is responsible for damages and penalties totaling nearly $35 million.
Don Connelly with the U.S. Attorney’s Office for the Eastern District of North Carolina said the plaintiff can’t comment at this time because the case is still ongoing.
According to court documents, the U.S. and the state of North Carolina filed the civil complaint against A Perfect Fit For You, Ms. Bandy and Ms. Gibson Dec. 13, 2017, but the store’s legal troubles began before then.
The News-Times previously reported Ms. Bandy filed a lawsuit in May 2016 against Ms. Gibson, alleging the bra store owner hadn’t given her half of the business’ shares and had shredded pertinent business documents. Ms. Gibson denied the allegation and others, including that she had submitted false Medicaid claims.
The state intervened in the case Feb. 15, 2017, and North Carolina’s Medicaid program intervened about a month later. At the time, the local bra store was accused of defrauding the state of around $12 million.
The state said in its February 2017 filing, “APF4U (A Perfect Fit For You) has received more than $12 million in payments from the North Carolina Medicaid Program for services and products it allegedly provided from October 2014 to present day.”
Another document from early 2017 reads, “An audit commissioned by the receiver found the APF4U does not have the necessary documents to support its claims to the Medicaid Program.”
Although Ms. Gibson was originally named as a co-defendant in the civil case, the plaintiff’s investigators later determined Ms. Bandy acted alone. The court does not say Ms. Gibson is liable for any of the damages.
Ms. Gibson’s attorneys with New Bern-based Ward and Smith PA declined to comment on the matter except to say, “…the recent judgment in favor of the Government was against Shelley Bandy only, not against Margaret Gibson.”
Contact Elise Clouser at firstname.lastname@example.org; by phone at 252-726-7081 ext. 230; or follow on Twitter @eliseccnt.