Ex-state worker gets 3 1/2 years in Medicaid fraud

Kim Austen, of Hudson, Wis., a former Minnesota state employee, stole more than $1 million in a five-year embezzlement scheme.

By JAMES WALSH, Star Tribune

Last update: October 20, 2009 - 11:28 PM

A former state employee who admitted to stealing more than $1 million from Medicaid was sentenced in federal court Tuesday to 42 months in prison.

Kim Joann Austen, 48, of Hudson, Wis., pleaded guilty in January to a scheme to embezzle money from the federal program. Specifically, she used her position in the state Department of Human Services to cause the state of Minnesota to issue 23 fraudulent checks. After the checks were issued, Austen admitted, they were cashed and the money used by her and others for personal expenses.

The total amount of the checks was more than $1.1 million.

The fraud continued from August 2003 through September 2008, according to the U.S. attorney's office. The Medicaid program provides medical care and services to people who meet income and other eligibility requirements and is administered in Minnesota by the state Department of Human Services.

The department contracts with health care providers to deliver services to Medicaid recipients.

Austen's conviction is the result of an investigation by the U.S. Department of Health and Human Services-Office of the Inspector General, the FBI, the Social Security Administration-Office of Inspector General and the state Department of Human Services.

Cal Ludeman, commissioner of the Human Services Department, promised that "DHS has taken steps to strengthen internal controls as a result of this incident to ensure it won't happen again."

U.S. Attorney B. Todd Jones called Austen's crime an abuse of trust that "siphoned money from a vital health care program that serves some of our nation's most vulnerable citizens."

The number of health care fraud investigations has been growing nationally, according to the U.S. Justice Department. On May 20, the department launched a task force -- the Health Care Fraud Prevention and Enforcement Action Team (HEAT) -- to combat the problem. According to federal officials, the Justice Department in 2008 filed criminal charges in 502 health care fraud cases involving 797 defendants.

According to a report by the U.S. Department of Health and Human Services, major areas of health care fraud include:

• Abusive billing in nursing homes, including false patient reports and improper billing of supplies and services.

• Fraud in home health care, including over-prescription and overcharging for oxygen and tube-feeding.

• Medical equipment fraud in which Medicare is overpaying.

• Fraudulent billing practices in which people use complex claims to find multiple ways to cheat the system.

James Walsh • 612-673-7428

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