Attorney General's statement on Centralia School District's Medicaid fraud

July 23, 2014

Last Friday my colleague Liv Finne highlighted a disturbing case of the Centralia School District committing Medicaid fraud. Last night I received this statement from the Attorney General's Office concerning the $372,000 settlement agreement with the school district:

This reflects a compromise that efficiently resolves the matter and avoids costly litigation. After the Centralia School District received the state's letter, they cooperated with the investigation that resulted in the $372,000 resolution. In addition, the District will participate with the Attorney General's Office and the Health Care Authority in efforts to improve the Washington Medicaid program and inform other school districts and education professionals about compliance pitfalls.

This case sends a message to all school districts to ensure they are complying with the law. Providers who participate in any Medicaid program must accurately bill only for allowable services provided and adequately document services delivered. The Attorney General's Office wants to ensure Medicaid funds are spent on the people and purposes for which they were intended.

Demonstrating the blatant nature of this Medicaid fraud was this example highlighted in the Attorney General's letter to the Centralia School District:

This school came to MFCU's (Medicaid Fraud Control Unit) attention when we obtained an email sent by the Principal to building time study participants. The email entitled "Big Money! Big Money! Big Money!" encourages participants to manufacture reimbursable activities on time study days in order to generate funds for the school . . . Although the "Big Money!" email piqued our interest, we became more concerned with the Middle School claiming after an analysis of state wide MAC (Medicaid Administrative Claiming) claims data showed that it generated the highest rate of MAC reimbursement for any middle school in Washington. It is likely no coincidence that its' Principal (the author of the Big Money! email) consistently over an extended period of time generated the highest level of Medicaid reimbursement of any middle school principal in the state . . . at this point in our investigation, we can prove, at a minimum, that the CSD acted 'in deliberate ignorance of the truth or falsity of the information' contained in its time study forms, which is sufficient to establish CSD liability.

With the promise of "Big Money!" to defraud Medicaid and increase funds for schools we believe the State Auditor's Office and investigators across the country should keep a close eye out for this type of scheme in all school districts.

As noted by Liv Finne:

Centralia’s new superintendent, Steve Warren, will be conducting his own investigations to determine what disciplinary actions are warranted. He will find his job much harder to perform because of the excessive job protections written into law which protect bad school principals (RCW 28A.405.245) and bad teachers (RCW 28A.405.100 et seq.). These job protections help create an environment and culture in some places, like Centralia Middle School, where administrators and teachers think nothing of falsifying time cards to defraud Medicaid.

Additional Information
Centralia School District defrauds Medicaid, pays $372,000 to settle investigation