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Dentist Convicted of Medicaid Fraud Tells a Cautionary Tale for All Doctors

The devil is in the details. It's an old saying that speaks volumes. The lesson is, if you don't pay attention to the details, the costs can be enormous. Just ask Dr. Roy Shelburne of Pennington Gap, Va., who was sentenced July 10 to two years in prison for three felony convictions of racketeering, defrauding Medicaid, and structuring a financial transaction.

Federal District Judge James P. Jones sentenced Dr. Shelburne to two years for each of the felony counts, which will run concurrently. Dr. Shelburne was also fined $75,000, and must pay nearly $18,000 in restitution to the state's Medicaid program. His sentence came a week after the judge threw out all seven of Shelburne's convictions for money laundering, based on a recent interpretation of the statute by the U. S. Supreme Court. Previously, the doctor had faced up to 120 years in prison and a $1.25 million fine.

As I was preparing this article, he contacted me to let me know he has been notified that the prosecution in his case has filed a notice to appeal Judge Jones’ decision to vacate the seven money laundering charges.

According to Dr. Shelburne, the prosecution has indicated they are also considering bringing a civil suit against him. "It appears this whole thing is a very long way from being over," Dr. Shelburne said.

On Friday, July 11, I asked Dr. Shelburne if he would be willing to answer some questions about his case to help other dentists learn from his mistakes. He agreed, and asked me to send him a list of questions. I sent him 17 questions, and he answered them all.

Penny: Dr. Shelburne, thank you for talking with us today. Let’s start by giving our readers a little information about how long you have been in practice, the size of your practice (in terms of number of patients seen per month), and the number of staff members you employ.
Dr. Shelburne: Penny, thank you for your interest in my story. If I can prevent this situation from happening to anyone else, airing my “dirty laundry” will have been worth the embarrassment. I was born and raised in Pennington Gap, Va. I went to the University of Virginia for my undergraduate education, then to VCU/MCV for my dental degree. I came back home and set up my practice, converting my grandfather’s hardware store building into a dental practice.
I graduated from dental school in May of 1981. I saw my first patient on July 27, 1981. As with most practices, it grew progressively. I began practice with one assistant and one business staff person in 1981. During the time in question — July 1, 1998 through Dec. 31, 2004 — I generally employed two business associates, three assistants, and two hygienists. The number of patients seen varied from day to day and month to month. We tried very hard to schedule appropriately for the services being provided, so the number of patients seen varied with the service mix. We had about 4,500 to 5,000 patients. Practice overhead averaged about 65%.

Penny: In the last few years, what percentage of your practice was private pay and what percentage was Medicaid?
Dr. Shelburne: The practice mix was approximately 50% Medicaid and 50% private pay.

Penny: It is my understanding that the area where you practice in Virginia is one of the poorer areas in the state. Is that correct?
Dr. Shelburne: Yes.

Penny: The charges filed against you all revolved around your handling of Medicaid patients. Have you ever had any major problems with third-party providers during your years of practice?
Dr. Shelburne: We had no problem of any kind with any other third-party provider. We really had no problem with Medicaid either. We had been audited by Medicaid (First Health) in 2001 and twice in 2006 by Doral. Doral is the present administrator for the Virginia Medicaid Smiles for Children Program. We understand that the complaint and subsequent investigation came as a result of an “anonymous” complaint to the local Commonwealth Attorney’s office, not as a result of any concerns from Medicaid.

Penny: Dr. Susan Phillips, who has been an insurance consultant for 21 years and has investigated many cases of insurance fraud, served as the expert witness for your defense. She did this in an independent capacity and not as an agent of her employer. She testified that after reviewing your records, she saw no patterns that indicated a scheme to defraud. She indicated to me that what she did see were some mistakes in recordkeeping and documentation and oversight of staff. Do you agree with her assessment, and if so, what would you do differently in retrospect?
Dr. Shelburne: I believe Dr. Phillips was “right on” in her assessment of the situation. We absolutely made mistakes! I believe that any dental office in the United States, if truthful, would indicate that billing mistakes are made; however, the government’s position was that these errors were not mistakes, but the errant claims were submitted to be paid for more than I was entitled. Interestingly, there was evidence presented that the errors went both ways. There were services that were provided that were not billed.
Our recordkeeping left a great deal to be desired and there was no oversight to speak of. I hired bright, capable people who were well-trained to do their jobs, and I trusted them to complete their tasks correctly. We had morning huddles and monthly meetings (all of which were brought up in my trial as evidence against me). Those meetings were held in order to plan for patient’s individual needs, streamline systems, and deal with any apparent or potential concerns about a patient. The prosecution held that these meetings made me “all about the money”.
Staff members never alerted me to the possibility that there were problems of the kind that were identified during the trial. Unfortunately, the staff made mistakes and I made mistakes. I do not blame my staff — regardless of who made the mistakes, the doctor is ultimately responsible for everything that comes out of the office. The fact that I was the only one who had direct responsibility for the data came out over and over during the trial. I did not take that responsibility as seriously as I should have, and I did not have systems in place for oversight and monitoring to identify and correct problems. I was made aware, during this process, that we, as a profession, are held to perfection when it comes to billing a government-funded program. For instance, there were instances where my financial coordinator made an error in billing using an inappropriate code and we were paid less than we were entitled. I was still charged with that act. The point is that, even though I was reimbursed less than I was entitled, the claim contained false information and therefore is considered fraud.
Hindsight is 20/20; however, I would have taken a much more active role in the everyday operation of the business area of the practice if I had it to do all over again. I also would have implemented systems of checks and balances, including one for monitoring the billing of services provided. Our charting and recordkeeping systems would have been more in depth.
For example, for defense purposes in a trial, it is not enough that you charted that there were areas that needed restoring. You must also have documented why you determined the treatment was needed. If occlusal decay was diagnosed on tooth No. 30, the chart needs to include a notation such as, “Tooth No. 30 occlusal decay was detected clinically by using an explorer. Significant ‘stick’ was felt.”
Time and again during the trial, it was pointed out to the jury that a chart did not reflect the specific need for treatment. At one point, the prosecutor turned to the jury and said, “I guess we’ll just have to take Dr. Shelburne’s word for it, won’t we?”

Penny: Dr. Phillips was your expert witness on the dentistry you performed and Tom Limoli Jr. was your expert witness on insurance filings. Both indicated to me that they felt the trial centered more on your lifestyle than the dentistry. Would you agree with these comments? If so, why do you think this happened?
Dr. Shelburne: The prosecution devoted a significant amount of time in this case presenting information regarding our “lifestyle” to the jury. As I understand it, in federal court, the prosecution is allowed to introduce 404b evidence in order to establish motive for the criminal activity. The government indicated that I committed health-care fraud in order to fund my “lavish lifestyle.” Although the “lifestyle” evidence had no bearing on the charges against me, it was allowed as a way of explaining to the jury why I had a motive to commit fraud. There was a significant amount of “lifestyle” evidence introduced.

Penny: Very few dentists charged with health-care fraud have been indicted under RICO. The jury found you guilty of these charges, but a federal judge overturned all seven of the money laundering convictions against you. Many have felt that the government chose to make an example of you. What are your own feelings about why the prosecution came after you so hard?
Dr. Shelburne: I can’t answer that question. They not only came after me, but also my family. I have tried and tried to make sense of all this, but some things will always be a mystery to me. Because I love this country and have a great respect for the legal and judicial system, I have to believe that the prosecution felt that they were just doing their jobs. I understand the government is using RICO as a deterrent to what is referred to as “white collar crime,” and is focusing on health-care providers as a nationwide initiative. I believe that we, as a profession, will begin to see cases of this type with greater and greater frequency, using RICO as a rule, not the exception, in order to achieve greater penalties and longer sentences.
I was most surprised and hurt that the investigators chose to interrogate my children at their universities. Three sets of agents, simultaneously in a “sting” operation, either removed them from class or stopped them as they went into their classes, in front of their classmates, to ask questions. My children were embarrassed and terrified by the experience. Although this is an acceptable method of investigation in this type of case, my children were profoundly affected by the experience. Finally, I am surprised by the prosecution’s recent notice that it intends to appeal the judge’s decision to vacate the seven money-laundering charges and the indication that they are considering a $700,000 civil suit.

Penny: Have you heard from other dental and/or medical professionals who have gone through something like this?
Dr. Shelburne: I guess that is one of the most surprising aspects of this whole ordeal. Several other dentists who have been through a similar ordeal or who are going through a similar circumstance now have contacted me. More dentists make contact with me every day. It seems that most have suffered in silence until now. This case is most certainly not the only one of its kind in the country today, and most assuredly will not be the last.

Penny: When did you first become aware that charges were going to be filed against you?
Dr. Shelburne: I first became aware of the investigation in the fall of 2003. The parent of a patient called to tell me that federal agents had taken his son to a local school to be examined by a dentist. Three weeks later on October 24, 2003, federal agents executed a search warrant on my office. I was attending the ADA meeting in San Francisco when multiple agents searched the office and seized all my patient and business records. During the next three years, the government conducted an extensive and exhaustive investigation. I was interviewed twice during this period. During these interviews, government agents indicated that I was going to be indicted. Almost exactly three years after the search and seizure — on October 24, 2006 — agents came to my home, arrested me, and transported me to the Bristol, Va., city jail. My family’s property was seized and our accounts frozen. Everything we owned was placed under protective order. I was arraigned the next day, October 25, 2006, in Federal Court in Abingdon, Va. We spent the next year and a half preparing for the trial.

Penny: You accepted Medicaid patients in the early years of your practice, and later stopped accepting them. Then, after several years, you began accepting Medicaid patients again, although it is my understanding that you had a very good private practice. What made you decide to become a Medicaid provider again?
Dr. Shelburne: I felt these patients deserved dental care. I still feel that way! My patients are in no way responsible for what has happened to me or responsible for the outcome. I love my patients and in no way wish to blame them for any of this.
At this time, there is one other full-time dentist and one other part-time dentist who accepts Medicaid in Lee County, Va. The number of dentists who participated in the Virginia Medicaid program in Lee County during the period changed as dentists came and left. The need for care in the county greatly outweighs the ability for the providers in the county to provide care.

Penny: Other dental professionals in your area did not get involved in the case. Why do you think some of your colleagues did not testify on your behalf?
Dr. Shelburne: We had identified two Virginia dentists who reviewed the information and were ready to testify on my behalf; however, their reports came too late in the process to be introduced and their testimony used. Many dentists were privately supportive, but didn’t want to subject themselves to the stresses and inconvenience of being a witness. (Had this not happened to me, I’m not so sure I would have gotten involved myself.) I believe that we as dentists are all trying to do the best we can and to stay out of harm’s way. This process is terrifying and time-consuming. I can’t blame any other dentist for wanting to stay out of it, but I have to say it’s a lot like the ostrich putting its head in the sand. As dental professionals, we need to stand together, work together, and support one another. Except by the grace of God, there go I.

Penny: You were allowed to continue in practice until you were sentenced. On the day of your sentencing (July 10), you voluntarily returned your license to the Virginia Board of Dentistry. How would you characterize your practice during the months between your conviction and final sentencing?
Dr. Shelburne: My patients have been wonderful. They have been so very supportive! I can’t tell you the number of patients who came by to tell me they loved me, supported me, and would miss me. Many were concerned about where to go and what to do about their dental care in the future. The last few months have really been about saying goodbye.

Penny: You were sentenced to two years, to run concurrently, for each of the felony counts, fined $75,000, and ordered to pay nearly $18,000 in restitution to Medicaid. What were your feelings on hearing this sentence?
Dr. Shelburne: I guess the best way to describe my feelings about the sentence is bittersweet. Two years away from my family … I don’t know that I’ll ever be able to get my mind around that. My wife has lost her husband and my children have lost their father for two years. I feel like I will be abandoning my family during that time. Having said this, however, I feel incredibly lucky and blessed. Things could have been worse, much worse.

Penny: Are you planning to file an appeal?
Dr. Shelburne: We have not made a final decision regarding an appeal.

Penny: When and where do you report to serve your sentence?
Dr. Shelburne: I have not been provided that information.

Penny: What advice would you give other dentists on becoming a Medicaid provider?
Dr. Shelburne: Weigh the possible pros and cons, and make a decision based upon what’s most important to you, your family, and your community. If you become a Medicaid provider, be very, very careful! Document, document, document; review, check, and recheck. Make no mistakes!

Penny: I know your family has been very supportive throughout your ordeal. Your son recently graduated from dental school and is just beginning practice. Has what happened to you changed his perspective on the practice of dentistry and how he will operate his practice?
Dr. Shelburne: Yes, his perspective has changed. Frankly, he is terrified! Additionally, I have a daughter in medical school and a daughter in a doctorate of audiology program. This experience has changed their perspectives on health care in general and on how they will operate their practices as well. I can’t answer for them, but I will encourage them to cross all the t’s and dot all the i’s. Assume nothing and check everything.

Penny: Any final comments you would like to make?
Dr. Shelburne: I pray that this situation will not happen again to anyone else. If I can help just one colleague — prevent the same thing from happening to him or her — the shame associated with putting this out there for all to see will have been worth it!

Editor’s Note: For more information about this case, go to Shelburne Aid, a Web site developed by a group of Dr. Shelburne’s family, friends, and concerned others.

To read more about this topic, go to my earlier discussions at Shelburne sentencing, Shelburne blog.

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I admire Dr. Shelburne's candor. He truly does seem to regret what has happened, and remains supportive of his family, patients, and staff all throughout what must be quite an ordeal. He did not point the finger to anyone other than himself, very much an admirable trait in this age.

I wish there was a way to say it's sort of OK to commit fraud with taxpayers' money. But there really isn't. Improving access to care through programs such as Medicaid is absolutely necessary, and it's also absolutely necessary to follow the record-keeping rules associated with them. I'm not an expert on automated or manual record-keeping systems, so I don't know what causes dental professionals to bend the rules and tempt fate. But I believe it behooves all dentists to accept the responsibility of adapting to small business practices that comply with the law.
Penny: Thank you for conducting this thoughtful, thorough interview and sharing it with the community.

Dr. Shelburne: I know I stand with many others in wishing the best for you as the future unfolds. Thank you for sharing your thoughts with us during this hard time. From your account, we've learned how critical it is for the dental practice to have documentation systems in near-perfect order.
It seems very unfair to me that if the prosecution's theme was "It's all about the money," then why didn't it take into account the services rendered by Dr. Shelburne but not billed to Medicaid? Or the services billed but underpaid by Medicaid? If these things were taken into account, the money paid vs. the money owed to Dr. Shelburne might have been a "wash." However, as he recounted, Medicaid considers all billing inaccuracies as "fraud." Interestingly, Medicaid doesn't consider its underpayments as fraud.

As for the requirement to detail the reasons for all treatment recommendations in Medicaid patients' charts, I wonder if physicians have the same requirement? They might, and I'd be curious to know if they do, but I've always heard that Medicaid medical clinics are "assembly line" operations. I can't imagine a physician taking the time to explain the reasons for every treatment recommendation in every patient's chart.

To say that Dr. Shelburne and his family was mistreated by an overzealous government investigation and prosecution is a gross understatement. And what happened to him could unfortunately happen to any dentist who does business with Medicaid. I sincerely hope that he can appeal the case successfully and get back to doing dentistry -- but if it were me, I'd sooner treat poor people in my spare time for free rather than do business with the government. It's just too risky.
this case is the dental equivolet to the lacross case at (Duke?)
complete miscarriage of justice by over zealous prosecuters. charging a dentnst with racketeering over a few thousand dollars out of several million dollars of revenus that was do to clerical errors is absurd.
any dentist to gets involved with Medicaid is insane at this point
the feds have hurt the dentist and the public

Thanks for participating in our discussion, doctor! I'm not familiar with the lacross case, so you might want to tell our readers a little more about it with a brief summary. And I do think a lot of dentists feel to same way you do about taking a chance on handling Medicaid patients with the microscope it puts doctors under and the pressure to truly ensure their documentation is absolutely impeccable.

Hi. The Duke lacrosse case involved three lacrosse players being prosecuted by a Mr. Nifong, the county prosecutor, for allegedly raping a black woman at a party. There apparently was evidence that they weren't even at the party, but Mr. Nifong disregarded it and it made a big splash in the national media. The whole story also appeared later to have been a fabrication, but the players were raked over the coals. Eventually there were exonerated, however, and I believe Mr. Nifong was in jeapordy of being disbarred because of his oversights in the case. This situation with Dr. Shelburne is certainly a miscarriage of justice! It sounds like there should be some penalty, but this is way overboard, and also has resulted in patients losing their dentist. It also raises questions about where you draw the line in how much the dentist is responsible for in the business. Of course, the owner/dentist sets up the policies and systems, and should monitor them regularly, but what if a staff member is engaging in embezzlement and is hiding things from the dentist? Does this only extend to government funded programs?

Another situation which is rarely discussed and where there seems to be a lack of concern is the issue of dental licensure. I was one of a group of dentists who have been severely disciplined by the Maine Board of Dental Examiners, often on bogus charges. In my case there was clear bias because the board blamed me with the abandonment of a patient, when in actuality I'd been left without a facility when a member of the board reneged on an agreement to turn over her office space to me when she later backed out of a partnership. She lied and the board sought to discredit me to cover this person's actions up so they started implying that i was a risk to the public, demanded psychiatric evaluations, etc. I had no office and was tryiing to find one, but eventually had to give up because of the board attacks and insistance (they had no authority to insist) that I get the evaluations. I had no income for many months and eventually had a hearing with the board one month after I'd been forced out of the state due to lack of income (they voted against me, no surprise). There was never anywhere to turn for help and I tried getting a lawyer, but it's hard with no income, so I lost my practice, home, name it. And I've had a rough few years trying to get my life and career back on track since I had to defend myself in my current state (successfully). And lately I've heard about other cases of board abuse of practitioners in Maine. One was based on bogus accusations of sex and drug abuse by a disgruntled former employee who had no evidence. Yet the dentist was suspended and is being lambasted in the press and well as being thrashed by the board.

So, unfortunately we have to be superhuman these days...allknowing and allseeing. You aren't taught how to defend yourself in school. It's no surprise that Dr. Shelburne's own kids are now terrified of being in health care after seeing what their dad went through. But I've worked with Medicaid patients and they are very apt to break appointments, as are other patients. But no one reimburses us for those many hours of lost income. Yet we can't even make a few unintentional mistakes even when it favors the government! Seems like things are really out of whack.
Thanks for reminding me about the LaCrosse case. The minute you said Duke, I knew what case we were talking about. Thanks also for your candid comments.




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