December 14, 2012
Federal prosecutors announced Dec. 13 that six city employees and a Jackson County, Mo., employee have been indicted by a federal grand jury for a scheme that allegedly involved hundreds of public employees who defrauded their health insurance carrier of more than $300,000 by falsely claiming to have competed in various fitness activities such as running, bicycling, even Olympic weightlifting competitions.
Charged in the scheme are: Crystal Burgin-Woods, 42, an employee of the Kansas City, Mo., Municipal Court; Matt Stivers, 41, an employee of the city’s information technologies department; Kim Blair, 36, and Sylvia Sims, 37, both employees of the city’s parks and recreation department; Matt Tholen, 29, an emergency medical technician; Michael King, 30, an employee of the city’s water department; and Michael Olukotun, 39, a corrections officer at the Jackson County jail.
The indictment alleges that the defendants engaged in a scheme to defraud Blue Cross and Blue Shield of Kansas City’s Points to Blue program, a program that offers cash incentives for insured’s participation in various wellness activities. For each 1,000 points earned through healthy activities, participants received $1 of credit toward a gift card or a pre-loaded debit card, up to $250 per year. The participant’s households were also eligible to participate in the program with the same rewards. More points were rewarded for more strenuous activites such as triathlons or marathons.
The indictment alleges that within the first six months of the program’s launch, fraudulent claims were submitted by the defendants, often for the most strenuous activities. For example, Crystal Burgin-Woods submitted claims that amounted to 383 gift cards that totaled over $185,000 in rewards. Matt Stivers submitted claims that resulted in his receiving 248 gift cards with rewards totaling $39,000. The indictment alleges the defendants also recruited co-workers to participate in the fraud and often kicked them back a portion of the reward proceeds, usually $50 according to court documents.
City Manager Troy Schulte released a statement Dec. 13 indicating: “We are very saddened with the allegations brought upon a small group of City employees. These alleged actions do not represent the majority of City employees who adhere to the City’s ethical standards.”
As a result of the scheme, 1,253 gift cards were issued totaling almost $311,000. Each defendant is charged with three counts of wire fraud.