Owner of Virginia Company Sentenced for $2.8 Million Medicaid Fraud

 RICHMOND, Va. – A Texas woman was sentenced today to 50 months in prison for defrauding the Virginia Medicaid program out of nearly $3 million.

“For over six years, the defendant stole over $2.8 million from the Virginia Medicaid program, using those funds to go on a spending spree at casinos, luxury retail stores, and foreign travel destinations,” said Raj Parekh, Acting U.S. Attorney for the Eastern District of Virginia. “This prosecution underscores our steadfast commitment to protecting essential government resources that are intended to help those in need of this critical assistance throughout our communities.”

According to court documents, Katrina Lynch, 39, of Cypress, Texas, owned and operated A Tender Heart, LLC, a company based in Midlothian. A Tender Heart was enrolled with the Virginia Medicaid Program as a Service Facilitator, a Medicaid provider that ensures Medicaid recipients receive needed and required services.

“We must hold fraudulent healthcare providers accountable, not only because they are stealing from our healthcare system but they are also stealing from Virginia taxpayers in the process,” said Mark R. Herring, Attorney General of Virginia. “I want to thank my hardworking Medicaid Fraud Control Unit for their work on this case, as well as our state and federal partners for their collaboration.”

Between 2011 and 2018, Lynch routinely submitted bills to Medicaid for services that her company never provided. For example, Lynch submitted bills to Medicaid for services supposedly provided to Medicaid recipients that had died, recipients that were hospitalized, recipients that transferred to other service facilitators, and recipients that had not been visited by any company employees for months. Due to these fraudulent submissions, Medicaid paid Lynch at least $2,816,633 to which she was not entitled.

“The Medicaid system is a lifeline for so many who depend on those funds to receive the necessary medical care they would otherwise not be able to afford. The FBI will not take an idle approach to the abuse of government programs,” said Stanley M. Meador, Special Agent in Charge of the FBI’s Richmond Field Office. “We will work with our investigative partners to hold criminals accountable; and demonstrate to the American people we are committed to upholding the law and seeking justice for those who need it. If you have information to share about potential Medicaid fraud, please contact the FBI at tips.fbi.gov or by calling our local field office (804-261-1044).”

Lynch received warnings about her billing practices during two audits performed at the direction of the Virginia Department of Medical Assistant Services (DMAS). As a result of these audits, A Tender Heart was required to repay over $335,000 to Virginia Medicaid. Lynch, however, continued her fraudulent scheme after these audits.

Lynch used the fraudulently obtained Medicaid funds to engage in extensive personal expenditures, including overseas travel, restaurants, gambling, cosmetic surgery, jewelry, and vehicles. For example, Lynch spent over $47,000 of Medicaid funds at casinos, including the Bellagio in Las Vegas, Nevada, and Harrah’s in New Orleans, Louisiana. In addition, she spent over $100,000 on clothing and jewelry at luxury stores such as Neiman Marcus, Saks Fifth Avenue, Tiffany & Co., and Louis Vuitton. Lynch further spent over $250,000 on travel expenses, including a trip to London in 2018, a trip to Atlantis Paradise in the Bahamas in 2017, a Royal Caribbean Cruise also in 2017, as well as trips to Hollywood, California, and Miami, Florida. Finally, she spent more than $25,000 on beauty services such as nail and hair salons, and she spent approximately $29,000 on entertainment expenses, including concert tickets, movie theaters, and golf.

Raj Parekh, Acting U.S. Attorney for the Eastern District of Virginia; Mark R. Herring, Attorney General of Virginia; and Stanley M. Meador, Special Agent in Charge of the FBI’s Richmond Field Office, made the announcement after sentencing by U.S. District Judge David J. Novak.

Assistant U.S. Attorney Katherine Lee Martin prosecuted the case.