Former Claims Manager from Virginia Birth Injury Fund Pleads Guilty to Embezzling $784,000

February 10, 2010 - RICHMOND, VA—Iris F. Allen, 44, of Richmond, Va., a former claims manger at the Virginia Birth-Related Neurological Injury Compensation Fund, also known as the Virginia Birth Injury Fund (BIF), pled guilty today in federal court to defrauding the fund of approximately $784,000. Allen is scheduled to be sentenced on May 14, 2010. Neil H. MacBride, United States Attorney for the Eastern District of Virginia, and Kenneth T. Cuccinelli, II, Attorney General for the Commonwealth of Virginia, made the announcement after Allen’s plea.

BIF was created by the Virginia General Assembly in 1987 to provide lifetime medical benefits to participating infants born with severe birth-related neurological injuries. BIF is currently funded by participating physicians and hospitals.

Allen pled guilty to health care fraud and aggravated identity theft as a result of a fraudulent billing scheme she began in July 2006. During her employment at the fund, from 2004 to 2009, Allen submitted false invoices to BIF for payment to one of two companies she created. The businesses – identified in the statement of facts filed with her plea agreement as Paratransit Company of Virginia and Dandridge Design and Construction, L.L.C. – were listed as the vendor or contractor on numerous false or inflated invoices. Unbeknownst to the BIF representative issuing payments, Allen was the sole owner of both companies. Allen also used the names of the parents of claimants in an attempt to create the appearance of legitimate invoices submitted to BIF.

In some instances, the invoices were for services never rendered, and in others, Allen submitted inflated invoices above the total cost for actual services provided by other vendors. The total amount of fraudulent claims Allen submitted to BIF, including inflated invoices, exceeded $1 million; however, the actual loss to BIF is approximately $784,000.

Allen faces a maximum penalty of ten years of imprisonment and a fine of up to $250,000 for health care fraud and a mandatory term of two years in prison for the aggravated identity theft, which must run consecutively to any other prison term imposed. She was continued on bond under the same conditions, which include electronic monitoring and home confinement. While on bond, Allen will be required by the government to liquidate assets for the purpose of making restitution to BIF.

The case was investigated by the FBI and the Virginia State Police. Assistant United States Attorney Laura Colombell Marshall and Special Assistant United States Attorney and Assistant Attorney General Shannon Y. Dion are prosecuting the case on behalf of the United States.

A copy of this press release may be found on the website of the United States Attorney's Office for the Eastern District of Virginia at http://www.usdoj.gov/usao/vae. Related court documents and information may be found on the website of the District Court for the Eastern District of Virginia at http://www.vaed.uscourts.gov or on http://pacer.uspci.uscourts.gov/.