DOJ: Va. business owner spent $2.8 million in Medicaid funds on travel, casinos, designer clothes

The Texas woman was sentenced to 50 months in prison.
(Source: Source: Pixabay/stock image)
(Source: Source: Pixabay/stock image)(Source: Pixabay/stock image)
Published: Jul. 19, 2021 at 5:56 PM EDT
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RICHMOND, Va. (WWBT) - A Texas woman was sentenced to more than four years in prison after defrauding the Virginia Medicaid system out of $2.8 million dollars, according to the U.S. Department of Justice.

Between 2011 and 2018, prosecutors say Katrina Lynch used funds for spending sprees at casinos, luxury retail store and foreign travel.

The 39-year-old woman owned and operated Tender Heart, LLC, a Midlothian-based company that ensures Medicaid recipients receive needed services.

According to a release from the Department of Justice, Lynch routinely submitted bills to Medicaid for services that her company never provided. For example, Lynch submitted bills to Medicaid for services supposedly provided to Medicaid recipients that had died. Due to fraudulent submissions, Medicaid incorrectly paid Lynch at least $2,816,633.

Officials say Lynch used the fraudulent funds for extensive overseas travel, restaurants, gambling, cosmetic surgery, jewelry and vehicles.

The Cypress, Texas, resident spent more than $47,000 of Medicaid funds at casinos, including the Bellagio in Las Vegas and Harrah’s in New Orleans. She spent more than $100,000 at luxury stores such as Neiman Marcus, Saks Fifth Avenue, Tiffany & Co. and Louis Vuitton.

Lynch spent more than $250,000 on travel expenses, including a trip to London in 2018, a trip to the Bahamas in 2017 and a Royal Caribbean Cruise in 2017. She also took trips to Hollywood, California, and Miami, the release stated.

She spent more than $25,000 on beauty services, and she spent approximately $29,000 on concert tickets, movie theaters and golf.

“We must hold fraudulent healthcare providers accountable, not only because they are stealing from our healthcare system but they are also stealing from Virginia taxpayers in the process,” said Mark R. Herring, attorney general of Virginia.

Officials say Lynch received warnings about the billing practices during two audits. As a result, A Tender Heart was required to repay more than $335,000 to Virginia Medicaid.

She was sentenced on Monday to serve 50 months in prison for the fraudulent activity.

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