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DHHS internal audit office increases staff to address potential fraud, waste

The state Department of Health and Human Services will expand its Office of Internal Audit from eight to 40 employees, DHHS Secretary Aldona Wos announced Wednesday.

"The staffing for the Office of Internal Audit has not kept up with the growth of the Department and its budget," Wos said in a Wednesday press release. "In light of recent challenges in the Department, particularly with unexpected shortfalls in Medicaid, DHHS is improving internal accountability and oversight to ensure the most efficient and effective use of taxpayer dollars."

The Office of Internal Audit evaluates different areas in DHHS, examining information as directed by the department’s secretary.

The department will shift existing vacancies into the internal audit division, so the expansion will not create any new jobs.

Juror misconduct leads to reduced convictions against LaRoque

A federal judge on Thursday set aside two of the 12 counts on which former state legislator Stephen LaRoque was convicted in June because of juror misconduct during the trial in Greenville.

The night before the verdict, one of the jurors had looked up on a home computer Internal Revenue Service instructions for filling out paperwork for taxes, which included information on S corporations, and mentioned it to other jurors the next day while deliberations were still under way.

Another juror mentioned it to the lead federal prosecutor in the case after the verdict came in, and the prosecutor, Dennis Duffy, reported it to U.S. District Court Judge Malcolm J. Howard. The judge called a closed conference on June 18, in which that juror and two others were questioned.

The juror said he didn’t think he was violating the judge’s order not to do independent research because he thought his inquiries were into a topic that is generally known, and not about a specific person.

LaRoque’s attorneys argued for a new trial on all counts, but Howard ruled that only two of the counts were relevant because they referred to filing false tax returns.

LaRoque is scheduled to be sentenced on Sept. 10. LaRoque was a high-ranking Republican member of the state House from Kinston, who got into trouble with authorities for mishandling funds in a federal loan re-lending enterprise.

The juror was apparently not punished.

Reporting fraud? There's an app for that

The state Auditor's Office has a smartphone application that allows people who spot government fraud or waste to report it, using their smartphones, to the office's investigative division.

Users can download photos or video to support their allegations, according to the office. By law, the names of those making reports are kept confidential. The app, available for iPhones and for phones using the Android operating system, allows for anonymous reporting.

Medicaid fraud unit busts dentist, other health-care providers

Two years ago the General Assembly beefed up the attorney general’s budget to double the size of the Medicaid Investigation Division. In its first sweep, a year ago, it arrested 20 people, and has obtained 17 convictions so far.

Now it has announced the results of its latest fraud sweep: the arrests on Tuesday of nine health-care providers, including a dentist, home health workers, a mental health car provider, and an HIV case manager.

Medicaid fraud investigations net $53 million

Medicaid fraud investigations led to the state recovering more than $53 million last year, Attorney General Roy Cooper's office announced today.

Cooper's office said Medicaid Investigations Unit activities during the 12 months from Oct. 1, 2009 to Sept. 30, 2010 - the federal fiscal year- resulted in 22 criminal convictions and 18 civil settlements that recovered $53.5 million. 

The biggest amount, more than $25.5 million, was part of a national, record-breaking $2.3 billion settlement with the drug company Pfizer. The settlement was announced in early September 2009, before the last fiscal year started. Cooper's office is counting it as part of last year's take because the money was collected in November 2009.

The team that investigated claims that Pfizer paid illegal kickbacks and marketed some of its drugs for unapproved uses included representatives from New York, Ohio, Massachusetts, Texas, Arkansas, Oregon, and Virginia.

The North Carolina Medicaid investigations office negotiated the state's part of the settlement, said Cooper spokeswoman Noelle Talley.

Medicaid, a state and federal program, pays for health care for the poor and disabled.

“Medicaid cheaters rob taxpayers, hurt needy patients and push medical costs higher for all of us,” Cooper said in a statement. “We’re stopping the waste and abuse and making violators pay.”

Facing a $3.7 billion budget hole, the state is looking for ways to limit Medicaid expenses. State officials have emphasized a crackdown on fraud in recent months, with Gov. Bev Perdue announcing work with first with IBM and later, SAS, to find cheats.

UPDATE:  More than $45 million of the money recovered came from national settlements with drug companies. 

Hayes 'dismayed' about former aide's sentencing

Former U.S. Rep. Robin Hayes told staff writer Barbara Barrett this morning he had no idea that a former staffer in his congressional office had been investigated, charged, convicted and sentenced to extorting his former constituents.

Hayes, a Concord Republican, called this morning to say that he was in a duck blind in Missouri, where he is vacationing, when his cell phone rang today with news of the sentencing.

“Shocked and dismayed,” Hayes said. “I had heard nothing about it.”

Elizabeth Lozada, 43, of Concord was sentenced Monday to two years’ probation of extorting less than $1,000, a federal misdemeanor. She worked as a constituent liaison in Hayes’ Concord office from 2005 to 2008.

See fraud in the stimulus bill?

The U.S. Government Accountability Office wants the public to help root out fraud in the economic stimulus bill, the Recovery and Reinvestment Act.

The GAO has invited general contractors, the public and government workers to report waste, fraud and mismanagement to FraudNet, its hotline for reporting allegations about the federal government, Barb Barrett reports.

Those who suspect problems can:
* Call 1-800-424-5454,
* E-mail,
* Fax 202-512-3086,
* Write to GAO FraudNet, 441 G Street NW, Mail Stop 4T21, Washington DC 20548, or
* Visit the website

The GAO says allegations can be made anonymously and are confidential. Tipsters are asked to provide as much detail as possible, and the agency may follow up with investigations.

Daves on Wright conviction

Linda Daves says Thomas Wright's troubles are not "an isolated incident."

In a statement today, the chairwoman of the N.C. Republican Party said that the former state representative's conviction on three counts of fraud are part of a problem with "entrenched Democrat power" in Raleigh.

Democrats have spent far too much time in courtrooms on the wrong side of justice instead of working for the interests of those who elected them. The fact that Mr. Wright used his position in the General Assembly to commit fraud is unacceptable. The fact that he did so by pocketing funds intended to be used for the benefit of the people of North Carolina is among the most egregious and reprehensible betrayals of the public trust.

She said that Republicans and Democrats should work together to "end the culture of corruption in Raleigh."

Hackney on Wright conviction

Speaker Joe Hackney has released a statement on the conviction of former Rep. Thomas Wright:

"For many years, Thomas Wright was a champion for people who often couldn't help themselves, but that doesn't excuse him from having to follow the law. The House of Representatives appropriately expelled him for his unethical behavior. Now, separately, a jury has determined he behaved illegally. I regret that his legislative career ended this way, but I look forward to moving ahead in our chamber and making sure the people of District 18 get the representation they deserve." 

Wright sentenced to five to eight years

Thomas WrightA Wake Superior Court judge today sentenced former Rep. Thomas Wright to 70 to 95 months in prison after his conviction on three felony counts of fraud.

Wright was kicked out of the state House last month because of allegations that he used his political sway to obtain a bogus letter from a state official to get a $150,000 bank loan, Sarah Ovaska reports.

Wake prosecutors also accused him of pocketing three charitable contributions, totaling $8,900.

Jurors convicted him of fraudulently taking the loan and $7,400 in charitable conditions. They acquitted him of one fraud count.

Before the sentencing, Wright's attorney, Doug Harris, blamed the verdict on the publicity surrounding the case.

"They were prejudiced coming in," Harris said about the jurors.

Harris gave notice that he would appeal Wright's conviction and predicted that the jury's decision would be overturned.

Wright was sentenced by Judge Henry Hight, who presided over the trial.

Correction: An earlier version of this post stated that Wright was led away in handcuffs. That is inaccurate.

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