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The owner of an Eastern Kentucky ambulance service was sentenced Monday to 12 months and one day in prison for submitting false bills to taxpayer-funded health programs.
Hershel Jay Arrowood, 44, of Breathitt County, also will be on home detention for 12 months and one day after completing his time behind bars.
U.S. District Judge Joseph M. Hood sentenced Arrowood’s wife, Lesa Arrowood, who helped handle billing for the company, to 12 months and one day on probation.
The couple and their business, Arrow-Med Ambulance, also agreed to repay a total of $249,539 to Medicare and Medicaid, and they face a potential judgment of several hundred thousand dollars in a related civil case.
Jay and Lesa Arrowood, the company and Terry Herald, who helped manage the operation, pleaded guilty to fraud.
The four admitted they took part in billing Medicare and Medicaid for taking patients to health appointments when an ambulance transport was not justified.
Medicare reimburses ambulance companies for providing non-emergency patient transport, but only in cases where that’s necessary, such as if a patient can’t walk.
Arrow-Med put false information on reimbursement claims, or omitted information, to make it appear patients qualified for ambulance rides.
The company certified one woman needed transport even though she could walk up a steep driveway after Arrow-Med took her home from a dialysis treatment, Spencer Melton, an investigator with the U.S. Department of Health and Human Services, testified Monday.
Another woman rode in the front seat of the ambulance and smoked while on the way to treatment.
The company was charged with submitting fraudulent bills between the fall of 2012 and August 2015.
Arrow-Med billed Medicare 1,374 separate times for unnecessary ambulance trips for those two patients, prosecutors said in a sentencing memorandum.
Those were the only two patients at issue in the two charges included in the guilty pleas by Arrowood and the others charged in the case.
The initial charges in the case listed three other patients that Arrow-Med allegedly improperly billed for transporting, but the government dropped those charges as part of the plea agreement.
The company billed $1,800 for the runs at issue in the indictment.
Arrow-Med, which is based in Jackson, and Herald are scheduled to be sentenced later.
Hood could impose a fine on the company.
Attorneys for Jay Arrowood asked the judge to place him on probation.
Arrowood grew up poor, collecting refundable soft-drink bottles as a kid to trade in for money for food, and through hard work was able to set up businesses that included a carpet store, used-car lot and a pawn shop, one of his attorneys, Kent Wicker, told Hood.
Arrowood has been preaching at the Canoe Full Gospel Church since 2001 and has donated flooring to churches and given cars to needy people, defense attorneys said in a court document.
Lesa Arrowood’s attorney, Jarrod James Beck, said she is a woman of faith who helps provide food, clothing and other necessities to people in need, helps people find work and has significant responsibilities in caring for family members.
“She’s truly as kind-hearted a person as you’ll ever meet,” Beck said during Monday’s hearing.
Jay and Lesa Arrowood thought that buying and running an ambulance service could help them realize their dream of starting their own church, their attorneys said.
However, they had no experience in running a heavily regulated business like an ambulance service, and got bad advice on how to submit bills from a consultant they hired, according to defense arguments.
“He and Lesa were in way over their heads,” Wicker said in court.
But prosecutors argued that the couple pressured employees to lie about patients’ medical needs in order to get money from the government.
Melton said more than 20 current and former employees told him that they were told to put false information on sheets documenting ambulance transports, called run sheets.
Some employees who tried to raise concerns about fraud had their hours cut, Melton said.
Lesa Arrowood allegedly had employees fudge run sheets before getting paid, and Melton testified that one Arrow-Med employee told investigators Jay Arrowood said he would blame the company’s consultant if problems came up.
“They created a culture of fear and intimidation at Arrow-Med, where the lower-level employees felt that their hours would be cut or their jobs would be lost if they refused to play along” with the scheme, prosecutors said in a memo.