Ky. ambulance service accused of lying to get payments from Medicare, Medicaid

Managers at an ambulance service in Breathitt County defrauded taxpayer-funded health plans by submitting false bills, a federal grand jury has charged.

The grand jury indicted Arrow-Med Ambulance; owner Hershel Jay Arrowood; his wife, Lesa Arrowood, who handled billing; and Terry Herald, who was a manager at the company.

The four are charged with one count of conspiring to commit health care fraud and 14 counts of aiding and abetting each other to submit false bills from September 2012 to August 2015.

They allegedly billed Medicare and Medicaid for transporting people for dialysis and other treatment when it wasn’t medically necessary for them to go by ambulance.

Lexington attorney Scott White, who represents the Arrowoods, said Friday they have not done anything illegal and that he believes they will be vindicated in the criminal case.

“Jay and Lesa Arrowood are good citizens who have done wonderful things in their community,” White said. “They are not embarrassed or ashamed about anything they’ve done because they have not broken the law.”

Medicare will pay for non-emergency ambulance runs, but only in cases that are medically necessary, according to the indictment. That could include cases in which patients can’t walk.

Paramedics and emergency medical technicians are supposed to accurately document each patient’s condition on a run sheet, and why that condition justified transport by ambulance.

Beginning in October 2013, Hershel Jay Arrowood told paramedics and EMTs at his company not to document it when patients could walk to and from the ambulance, the indictment charged.

At the same time, Lesa Arrowood began telling employees to include false information about patients’ conditions on the run sheets, and Terry Herald falsified run sheets or caused others to do so, the indictment said.

The defendants allegedly used the false information to bill for ambulance runs that weren’t medically necessary and weren’t eligible for payment. The goal was to keep money coming in from Medicare and Medicaid reimbursements, the indictment said.

The government alleged in a separate civil complaint that Arrow-Med filed thousands of fraudulent bills that caused a loss of more than $1 million to Medicare and Medicaid.

The alleged scheme to defraud taxpayer-funded programs focused on the routine transport of people to dialysis clinics, but the company also improperly billed for taking people to doctor’s offices and hospitals, the lawsuit said.

That lawsuit included several examples of alleged unnecessary ambulance trips.

In November 2012, for instance, Arrow-Med took a woman identified by the initials J.B. for dialysis even though she could walk and didn’t need to go by ambulance, the complaint said. A clinic document dated the next day said J.B walked half a mile a day for exercise.

The complaint included a photo from June 2015 showing J.B. walking unassisted up a steep gravel drive to her home after an Arrow-Med crew brought her home from dialysis.

The run sheet for that trip did not mention her being able to walk without help.

In another case in February 2013, patient J.N. refused to get in the back of the ambulance and rode up front to the dialysis clinic, the lawsuit said.

Arrow-Med has denied in that lawsuit that it billed health plans for ambulance runs that were not medically necessary.

The charges in the criminal case carry a top sentence of 10 years in prison.

The government also plans to try to recoup money the company and officials improperly received if they are convicted.