A new whistleblower case filed in the U.S. District Court for the Eastern District of North Carolina has uncovered an alleged Medicaid fraud by a North Carolina prosthetics company.

The company, A Perfect Fit for You, Inc., is purported to have billed Medicaid for over $12 million in durable medical goods that it never bought or gave to patients, according to Law360.

The alleged Medicaid fraud might not have been found, or this whistleblower case filed, had there not been a legal argument over ownership of the company.

In May 2016, there arose a dispute over who owned the company when Shelley B. filed a lawsuit claiming partial ownership of the prosthetics clinic that Margaret G. had previously asserted complete control.

A North Carolina county judge remanded the lawsuit to business court, granted an injunction that prevented Margaret G. from liquidating A Perfect Fit for You, Inc.’s assets, and appointed a receiver.

The receiver allegedly discovered a huge gap in documentation for nearly $12 million in Medicaid payments by the U.S. government. The missing paperwork included purchase orders, records of incoming invoices or payments, and signed delivery documents.

The receiver noted that the gap was immediately apparent and would have alerted any conscientious bookkeeper or reviewer. The documentation lack sparked the whistleblower case filing by the state and federal governments.

The medical goods lacking this paperwork were varied and consisted of cough stimulators, pneumatic compressors, specialized air mattresses, osteogenesis stimulators, or orthotics for knees, ankles, and feet.

Other apparent situations found by the receiver allegedly included a Medicaid payment for $900 for mastectomy bras and breast prostheses for one patient with cancer. The patient purportedly never was diagnosed with cancer.

A Perfect Fit for You, Inc. also allegedly billed Medicaid for a power wheelchair and other durable medical equipment worth $26,000. This equipment was allegedly never purchased by the company, paid for, or delivered to the patient.

According to the narrative of this whistleblower case, the appointed receiver noted that, if the billings were above board and all equipment had been ordered, paid for, and delivered as per usual protocol, the first step would have been to bill Medicare.

This step was allegedly bypassed by the prosthetic company, although they claimed they had done this, and the complete burden of payment was laid on the state. In typical situations, Medicare pays up to 80% of a claim, leaving the state’s Medicaid program to cover the small remainder.

The two disputed owners, Shelley B. and Margaret G., have claimed responsibility for not providing equipment in question to patients as indicated, but argue as to who is the responsible party for the false claims leading to the whistleblower case. The government is seeking a return of any and all ill-gained funds from the public healthcare system.

The Whistleblower Case is U.S.A., et al. v. A Perfect Fit for You Inc., et al., Case No. 4:17-cv-00174, in the U.S. District Court for the Eastern District of North Carolina.