Washington State

Office of the Attorney General

Attorney General

Bob Ferguson


Olympia - March 23, 1998 - A record $2.6 million was returned to the state's Medicaid program in 1997 as a result of prosecutions and settlements by the Attorney General's Medicaid Fraud Control Unit. The returned money came in the form of restitution, overpayments, penalties and fines resulting from fraud cases the unit investigated and prosecuted.

"The recoveries are larger because the frauds are getting larger," explained Attorney General Christine Gregoire. "We are getting busier all the time and cases are getting bigger and more complex."

David Waterbury, head of the AG's Medicaid Fraud Control Unit, said in recent years there has been an increase in the number of eligible Medicaid recipients, providers, and expenditures, combined with changes in the medical delivery system.

Since 1990, there has been a 46 percent increase in the number of Washington residents eligible to receive Medicaid. Medicaid expenditures have increased more than 50 percent and the number of Medicaid service providers have increased as well.

"The medical delivery system in this country has changed significantly over the last several years," said Waterbury. "Ten years ago, labwork was usually done in a small lab within a hospital. Today, many of those hospitals have joined with larger, multistate medical service providers that use larger, national laboratories."

The MFCU concluded a number of major fraud investigations, prosecutions and settlements with guilty findings this past year including:

SmithKline Beecham Clinical Laboratory
The unit took a lead role negotiating a multi-million dollar settlement on behalf of 43 states with SmithKline Beecham Clinical Laboratory. SmithKline had overcharged state and federal authorities in a variety of ways, including performing and charging for a number of medically unnecessary and exotic blood tests. Washington state received a total of $1.59 million.

Terrace View Convalescent Center
Terrace View Convalescent Center, Inc., its owner and administrator Philip Gayton, and former comptroller Alice Park were found guilty of charges of filing false cost reports resulting in more than $300,000 in losses to the Medicaid Program. The corporation was ordered to pay restitution of $318,000 and a fine of $75,000; Gayton was ordered to pay restitution of $68,000; and Park agreed to pay $250,000 in restitution.

Allied Clinical Laboratories
This case was a multi-state investigation involving a number of the nation's largest clinical laboratories which were charging state Medicaid Programs for unnecessary medical tests. The total settlement, split between the federal government and 40 states, was $187 million. The states' share of Medicaid restitution was $8.6 million &endash; from which Washington received more than $171,000.

The Medicaid Fraud Control Unit's mission is to investigate and prosecute crimes committed by health care providers who divert Medicaid moneys. Additionally, the unit investigates and prosecutes patient abuse and neglect in Medicaid funded long-term care facilities or refers such cases for prosecution to local authorities. The unit also works with the Department of Social and Health Services in identifying and addressing areas where the system is vulnerable to fraud or abuse.