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Businesswoman sentenced to four years in $2.8 million health care fraud; money spent on travel, gambling and other personal uses
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Businesswoman sentenced to four years in $2.8 million health care fraud; money spent on travel, gambling and other personal uses

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A woman whose business billed the Virginia Medicaid program for more than $2.8 million in work that was not performed was sentenced to four years and two months in prison Monday.

Katrina Lynch, 40, who had been living in Texas since 2014 and blamed her conduct in part on a gambling addiction, pleaded guilty to health care fraud in July 2020 and faced up to 20 years in prison when sentenced by U.S. District Judge David J. Novak. Federal sentencing guidelines called for a term of 46 to 57 months.

Prosecutors asked Novak for a 50-month sentence. "Katrina Lynch, over more than six years stole nearly $3 million from Virginia's Medicaid program, which provides medical assistance to indigent, elderly, and disabled individuals throughout the state," wrote the U.S. attorney's office in seeking a 50-month prison term.

The government said she spent over $47,000 at casinos in Las Vegas, New Orleans and elsewhere and $100,000 on clothing and jewelry from stores such as Neiman Marcus, Saks Fifth Avenue, Tiffany & Co. and Louis Vuitton. She spent over $250,000 on travel expenses, including a 2018 trip to London and to the Bahamas in 2017.

Other personal expenses included vehicles and cosmetic surgery.

"The frivolous manner [Lynch] squandered critical government health care dollars is simply appalling," wrote prosecutors to Novak. Her conduct impacted Medicaid recipients as well as the Medicaid program.

Lynch's lawyer, Valencia Roberts, sought a 12-month prison term followed by 12 months home confinement. Roberts cited her client's health problems, lack of a prior record, compulsive gambling and support of her two children and ailing 82-year-old grandmother in asking for a lenient sentence.

Caring for her mother, who died in 2018, running her business and her own health problems led to a great deal of stress, wrote Valencia in a sentencing memorandum.

"The casinos became Ms. Lynch's means of escape," according to Valencia.

Court records show Lynch owned and operated A Tender Heart LLC in Midlothian, which had six employees and was a "service facilitator" for the Virginia Department of Medical Assistance Services. VDMAS administers the Virginia Medical Assistance Program, also known as Medicaid.

Service facilitators make sure that Medicaid recipients are receiving the in-home care that Medicaid is billed for, according to a five-page charging document filed in the case.

The fraud took place from 2011 to 2018 as Lynch billed Medicaid for services that were never provided to 156 Medicaid recipients, some of whom had died, others hospitalized or transferred to other service facilitators.

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