CARO — A Caro man will be sentenced Monday for defrauding Blue Cross Blue Shield of Michigan out of more than $1.7 million.
Robert John Daniels, 50, Caro, and former president of United Health Services Inc., pleaded guilty to four counts of obtaining more than $100,000 under false pretenses and one count of insurance fraud.
He faces up to 20 years in prison (with at least five years mandatory) and also has to pay full restitution to Blue Cross Blue Shield of Michigan – including $250,000 due by his sentencing.
Daniels pleaded guilty Feb. 1 and will be sentenced Monday by Tuscola County Circuit Court Judge Amy Grace Gierhart.
“Oftentimes, I think people don’t have an accurate perception of all the consequences of embezzlement,” said Mark Reene, prosecutor, Tuscola County.
“There are always multiple victims…and it becomes a bit unconscienable.” Records obtained by The Advertiser from Tuscola County Circuit Court and from Michigan State Police through the Michigan Freedom of Information Act show the fraudulent acts involved eight customers of United Health dating to 2009.
That includes one customer whose identity was used to bill Blue Cross Blue Shield of Michigan for more than 200,000 bandages between October 2010 and June 2013 for a total of more than $1.4 million.
“It is extraordinarly serious,” Reene said. “It impacts customers, it impacts companies, it impacts employees, it impacts jobs…there’s a ripple effect.”
United Health Services continues operation.
Rebecca Daniels – the registered agent of the company since Jan. 14, according to state records – was reached by The Advertiser Friday via United Health’s business telephone number.
“I don’t want anything printed,” Daniels said. “I understand you have freedom of press and all that, but I’d greatly appreciate it if you’d just leave it alone. They can read it in court news, they always print it in there, and I don’t need it.”
According to the medical equipment company’s website, United Health provides services to 17 counties including Tuscola, Huron, and Sanilac counties and all the way up to Roscommon County.
As recent as Feb. 16, the company’s blog was active – most recently with a post entitled “Increase Your Mobility!”
The website indicates the company accepts insurance from more than 50 organizations, including Blue Cross Blue Shield.
The site also details some of the services offered by United Health: 24-hour on-call service; “courteous and prompt” delivery; and a professional billing department “that is able to handle Medicare, Medicaid, Workman’s Comp, and private insurance claims.”
Investigation records from Michigan State Police show that when asked by investigators, Daniels said he had no vices such as drugs or gambling. He told investigators that 90 percent of the funds “had gone back into the business.” Daniels also told police he owned horses, but said the only money that had gone toward the animals was for “possibly veterninary.”
After initially denying the charges specific to the customer billed for more than 200,000 bandages, the Michigan State Police report indicates Daniels ultimately admitted to “trying to resolve cash flow issues within the business” and said the bandages were not delivered.
Further, Daniels told police he and his grandmother own the building at 171 N. State Street in downtown Caro and there is a $900 monthly mortgage for which United Health Services Inc. rents from Professional Medical Group L.L.C. – of which he is also owner. Daniels said his home has a $1,200 monthly mortgage and he has $40,000 in personal credit card debt.
Daniels detailed to police how he was visited by an auditor from Blue Cross Blue Shield who was asking about the exorbitant billings for the customer who had supposedly taken delivery of the more than 200,000 bandages.
The auditor told police that United Health billings to Blue Cross Blue Shield of Michigan increased from about $9,000 in 2011 to about $31,000 in 2012 – and then jumped to about $589,000 in 2013.
As a result of the visit from the auditor, Daniels told police “he decided to create the prescriptions and invoices to support the billings to Blue Cross.”
“The evidence shows a lack of mistake or accident in the case…(or) that the fraudulent billings wither the produce of an innocent error by UHS,” Eric Wanink, chief assistant prosecuting attorney, Tuscola County, said in a pre-trial court document. “The defendant has utilized this same scheme…on at least five other clients to defraud BCBS.”
Court documents filed by the prosecutor indicate the investigation involved interviews with five other people whose names were used to bill the insurance company.
One witness from Sebewaing told investigators that he had received two boxes of bandages – one with 15 bandages and another with 45. However, records indicate that over a six-month period Blue Cross Blue Shield of Michigan paid more than $21,000 to United Health Services “for thousands of gauze and bandages.”
The witness also told investigators he received “at least 25 explanation of benefits” statements.
Reene said it’s important for people to pay attention to such statements and reach out to authorities or insurance company officials if something seems wrong.
“If people see something that doesn’t look right they should immediately call law enforcement and/or the insurance company to bring it to their attention,” Reene said. “Nobody should ever hesitate to do that.”
Andrew Dietderich is editor of The Advertiser and can be reached at email@example.com