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Attorney General Josh Stein Announces Health Care Fraud Sentencing

For Immediate Release:
Tuesday, August 31, 2021

Contact:
Nazneen Ahmed (919) 716-0060

(RALEIGH) Attorney General Josh Stein announced that Shelly Phillips Bandy of Morehead City was sentenced to 30 months in federal prison and three years of supervised release and ordered to pay $374,809.92 in restitution jointly with her company, A Perfect Fit for You, Inc (APFFY), after pleading guilty to making material false statements relating to health care matters. Bandy must also pay $34,708,945.42 in a civil judgment related to this conduct.

“I’m pleased that the Medicaid program will be paid back for the money this person and company wasted,” said Attorney General Josh Stein. “Medicaid is set up to help people get the health care they need and when providers defraud it, my office will hold them accountable.”

APFFY was located in Morehead City and sold durable medical equipment including powered wheelchairs, orthotic braces, diabetic shoes, powered air flotation beds, osteogenesis stimulators, and pneumatic compressors. Between March 2015 and November 2016, one or more APFFY employees submitted fraudulent billing claims to Medicaid for providing durable medical equipment to Medicaid recipients. These claims contained the personal identifying information of Medicaid recipients who had never ordered or received any durable medical equipment from the company and who, in some cases, were already deceased. Medicaid lost approximately $10,069,361.35 as a result of the scheme.

The company self-reported suspected fraudulent activity to the North Carolina Department of Justice’s Medicaid Investigations Division (MID) and cooperated throughout the investigation. The United States and North Carolina filed a civil complaint against the company and its owners, Bandy and Margaret Gibson, in December 2017. APFFY agreed to pay $20,138,722.70 and Gibson has agreed to pay $4 million to resolve the claims.

APFFY also pleaded guilty to a criminal information charging health care fraud and in March, Attorney General Stein announced that the company was sentenced to five years of probation and ordered to pay a $2 million fine in addition to paying $10,069,361.35 in restitution to the North Carolina Medicaid program. On December 29, 2020, Bandy pleaded guilty to making false statements relating to health care matters and admitted to submitting fraudulent claims to Medicaid on behalf of APFFY. Specifically, Bandy admitted that on January 1, 2016, she billed Medicaid for 43 fraudulent claims, totaling $626,773.79. Medicaid subsequently paid $374,809.92 for those claims.

The investigation and prosecution of this case was conducted by MID, the United States Attorney’s Office for the Eastern District of North Carolina, and the United States Department of Health and Human Services Office of the Inspector General.

About the Medicaid Investigations Division (MID)
The Attorney General’s MID investigates and prosecutes health care providers that defraud the Medicaid program, patient abuse of Medicaid recipients, patient abuse of any patient in facilities that receive Medicaid funding, and misappropriation of any patients’ private funds in nursing homes that receive Medicaid funding. To date, the MID has recovered more than $900 million in restitution and penalties for North Carolina. To report Medicaid fraud or patient abuse in North Carolina, call the MID at 919-881-2320.

The Medicaid Investigations Division receives 75 percent of its funding from the U.S. Department of Health and Human Services under a grant award totaling $6,160,252 for Federal fiscal year (FY) 2020. The remaining 25 percent, totaling $2,053,414 for FY 2020, is funded by the State of North Carolina.

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