Learning moment: Medicaid fraud is still a priority

In law, as in life, certain items remain consistent. One of those items is state and federal prosecutors investigating fraud and holding the actors accountable.

A recent example – a joint investigation by the Minnesota Attorney General’s Office and the U.S. Department of Justice – led to two individuals pleading guilty. While two individuals pleaded guilty, another individual has not yet entered a guilty plea.

What led to the investigation and guilty pleas, which involved wire fraud? According to the MN AG’s October 23, 2025 press release,

For years, Grygo, Heim, and Magadanz overbilled DHS and UCare for substance abuse treatment services they did not deliver. The overbilling scheme included adding client names to counselor logs after the fact, and other falsification of back-dated records. In addition to overbilling, Evergreen also steered hundreds of clients to a sober housing provider, Second Chances Sober Living, which is controlled by one of Evergreen’s owners. Evergreen clients were offered free housing at Second Chances, but only if they agreed to attend a certain amount of programming at Evergreen Recovery, which Evergreen could bill Medicaid for, but which, in many cases, Evergreen did not actually provide. Through these illegal kickbacks and other false billing practices, Evergreen’s leaders are accused of stealing millions from Minnesota taxpayers. As laid out in Heim and Magadanz’ written plea Evergreen employees who raised concerns were either silenced, shut down, or lied to regarding the lawfulness of Evergreen’s practices.

Notably, as the last sentence indicates, employees who attempted to raise concerns were retaliated against. Not only is this a violation of the Federal False Claims Act, 31 U.S.C. § 3730(h), it is also problematic from an employment law standpoint. Employers should have anti-retaliation provisions in place, as well as processes for workforce members to report good faith concerns about healthcare and cybersecurity issues, among others. Both State and Federal prosecutors take adequate and effective policies and procedures into account when considering plea deals and damages mitigation. Another item not to overlook are the seven elements of a compliance program as set forth in 42 CFR § 483.85. As a reminder, these are the seven general areas: (1) written compliance policies and procedures; (2) compliance officer or team; (3) sufficient resources to reasonably assure compliance standards; (4) effective communication; (5) training; (6) annual review; and (7) response plans (prevention, detection and correction).

In sum, anything that is potentially actional and involves criminal penalties, should not be ignored. The best defense is office through an adequate compliance program and anti-retaliation provisions.

Rachel V. Rose, JD, MBA, advises clients on compliance, transactions, government administrative actions, and litigation involving healthcare, cybersecurity, corporate and securities law, as well as False Claims Act and Dodd-Frank whistleblower cases. She also teaches bioethics at Baylor College of Medicine in Houston. Rachel can be reached through her website, www.rvrose.com.