CHARLOTTE, N.C. - A Channel 9 investigation uncovered a new type of fraud targeting North Carolina's $15 billion Medicaid program.
The victims are children.
Every year, North Carolina's Medicaid program racks up tens of millions of dollars in fraud.
Investigators blame people like Rodnisha Cannon, who they say try to beat the system.
According to the FBI, the Charlotte woman and others working with her ran after-school child care programs in Gastonia and Shelby.
Initially, the agency said those child care providers were helping kids.
Then agents said Cannon started filing Medicaid claims for the children, but “in many instances the services were never provided at all,” with more than $4.8 million in false claims.
The money was paid by Medicaid and according to the FBI, a good chunk of it ended up in bank accounts controlled by Cannon and her co-conspirators.
Cannon admitted in court she used more than $59,000 of that money to buy a Mercedes-Benz.
Calvin Estrich, of Charlotte, ran what was advertised as an in-home therapy center for children in a west Charlotte business park.
Agents said he also defrauded Medicaid of at least $450,000 by stealing the identities of children on Medicaid.
When Channel 9 went looking for Estrich, Eyewitness News found his one-time business was replaced by another company.
North Carolina Attorney General Roy Cooper said his investigators are seeing more fraud involving people stealing the identities of children.
Here's how it works:
A summer program or a child care program will require a Medicaid card for the child.
The worker bills Medicaid for mental or behavioral health services they claim the child needs. Medicaid sends payment to the program, but the child never receives the service.
It often starts with the initial applications.
A provider applies for reimbursement from Medicaid, and if it's approved usually so are the other applications after that.
Investigators are now reviewing those applications a lot closer than they have before.
The only oversight comes from the Department of Health and Human Services in Raleigh, which looks for Medicaid fraud using a new computer program.
Cooper said the system is slow and has too many problems, which create delays in flagging potential fraud.
“It's important that we have all of the evidence and show precisely how these criminals rip off the Medicaid system. It's important for us to have that technology and right now we're a little frustrated because we don't have what we need,” Cooper said.
A frustration Channel 9 took to Department of Health and Human Services Deputy Secretary Dave Richards.
He admits the computer programs to catch fraud have not been working as planned.
He also says his team is now working more closely with the AG's office to identify fraud more quickly, especially those involving the identities of children.
“It's all hands on deck as we do it. We know we have to change and we're doing that pretty rapidly,” Richards said.
For more information on reporting fraud, click here.