Investigation by Special Agents led to charges of filing $2.2 million in false Medi-Cal claims.
Source: The Redding Record Searchlight
Date: 10/12/2009
A 57-year-old Redding woman who ran a Mount Shasta health clinic has been charged with filing $2.2 million in false Medi-Cal claims and taking $33,000 from the non-profit clinic to pay her personal credit card bills.
Denise Fairhurst is being held in the Siskiyou Country jail today on charges of grand theft and filing false insurance claims. Her bail is set at $1 million.
Her arrest Wednesday came after a more than year-long investigation by the California Attorney General's office.
"Fairhurst ran a health clinic that was losing money and in danger of closing because of widespread financial mismanagement," Attorney General Jerry Brown said today in a statement. "To keep her operation afloat, she submitted millions of dollars of bogus claims to Medi-Cal and in the process violated California law."
The investigation revealed that between January 2004 and December 2007, Fairhurst, the manager of Alpine Health Clinic in Mount Shasta, filed false reimbursement claims to make up for "widespread endemic financial mismanagement," said Scott Gerber, a DOJ spokesman.
Such poor fiscal decisions included paying maintenance workers $250 an hour and giving exorbitant raises to employees, Gerber said.
The clinic also lost income because of an agreement she had made with doctors to provide care to patients when they were admitted to a hospital, Gerber said.
The clinic paid $250,000 for the salaries of the two physicians, even though they were also being paid by the hospital, according an affidavit in the case.
Other medical clinics in Mount Shasta complained they lost employees to Alpine because they could not compete with its pay scale, Gerber said.
As costs rose, Fairhurst began paying for such exorbitant expense by filing Medi-Cal reimbursement claims for patients who never came to the clinic, as well as funneling money to pay the balance of her American Express card, the affidavit alleges.
Part of the $33,000 went to pay her daughter's colleges expenses, the affidavit alleges.
In 2008, the clinic's board of directors hired an auditor to go through the organization's books after suspicions were raised about misappropriation of funds. Fairhurst was uncooperative and wouldn't talk to the auditor, Gerber said.
Fairhurst's last day at the clinic was on July 6, 2008. She moved from Dunsmuir to Redding.
"Even so, the board had Fairhurst come back to do payroll and the Medi-Cal billings because no one else knew how to do it," the affidavit alleges.
The lack of oversight of Alpine's finances likely will prompt federal and state authorities to mandate some widespread changes at the clinic, said board member Dr. Evelyn Callas.
"We are committed to following all recommendations and mandates that may be determined by the Office of the Inspector General and the State Attorney General's office," Callas said in a statement. "We remain committed to our patients and we are confident that the clinic will continue to provide quality medical services for our community without significant interruption."
Fairhurst is scheduled to be arraigned Friday. If convicted, she faces up to five years in prison.
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