Married Couple, Son, and Accomplice Convicted of Defrauding Medicare, Medicaid and TriCare

Jackson, TN – Following a three-week trial, a federal jury has convicted a married couple and their son, of health-care fraud offenses that led to millions of dollars lost to federal health care programs. U.S. Attorney D. Michael Dunavant for the Western District of Tennessee announced the convictions today.

Sandra Bailey, 67 of Jackson, Tenn., was convicted of 16 counts, including conspiracy, health care fraud, and paying illegal kickbacks in connection with health care services. Her husband, Calvin Bailey, 67, was convicted of conspiracy. Their son, Bryan Bailey, 39, of Milan, Tenn., was convicted of conspiracy and wire fraud. The jury returned guilty verdicts on all 17 counts alleged in the indictment.

U.S. Attorney D. Michael Dunavant said: "Dishonest criminals are using more creative and disturbing fraudulent schemes to victimize vulnerable citizens and the American taxpayers for their own selfish gain. This case represents our commitment to expose these fraudulent schemes, protect the integrity of the Medicaid system, hold offenders accountable for their dishonest criminal conduct, and to recover ill-gotten proceeds on behalf of the government. The U.S. Attorney’s Office is willing and able to go to any lengths in our pursuit of justice in healthcare fraud cases."

Evidence at trial revealed Sandra Bailey and Calvin Bailey sold durable medical equipment including power wheelchairs and back braces. From November 2009 to September 2011, they were both employed at Jaspan Medical Systems ("Jaspan"), a durable medical equipment company with an office in Jackson, Tenn. Durable medical equipment is designed for repeated use and legitimate medical purposes. Following their employment at Jaspan, the couple was employed by other medical supply companies in West Tennessee, Kentucky and Mississippi. Calvin Bailey is also the former principal at Medina Elementary School in Medina, Tenn. Bryan Bailey was the operations and sales manager at Jaspan from October 2009 to July 2013.

While employed at Jaspan, the Baileys began to market wheelchairs to patients and represented them as paid fully by Medicare, and at no cost to the patients. To market the equipment, the Baileys used an extensive network of illegally paid recruiters to find eligible patients. After finding the patients, Sandra and Bryan Bailey would forge and falsify documents to make it appear that the patients qualified for the equipment. They also enlisted a local physician and nurse practitioner to order the equipment without the required physical examinations to determine if the equipment was medically necessary. To facilitate this scheme, Sandra Bailey paid illegal kickbacks to the medical providers.

Numerous patients testified that Sandra Bailey offered the equipment at no cost, and that they never saw the doctor or nurse practitioner before the Baileys delivered the back braces and power wheelchairs. Many also testified that they never used the power wheelchairs, and that the power wheelchairs were too large to be used in their homes. Even though most of the patients could walk, drive vehicles, and care for themselves without the need for a power wheelchair, the Baileys would falsify medical records to make it appear that the patients were qualified. In order to qualify the patients to receive the equipment at no cost, Bryan Bailey falsified and directed others to falsify patients’ income and expenses to make it appear that they were indigent.

In 2010, Bryan Bailey expanded Jaspan’s sales into North Mississippi, and hired a sales representative named Dennis Sensing to sell power wheelchairs. Sensing paid illegal kickbacks to patient recruiters to find Medicare and Medicaid patients. Bryan Bailey received sales commissions for the power wheelchairs sold by Sensing. In order to bill Medicare and Medicaid for the equipment, Sensing forged the signature of a nurse practitioner with Bryan Bailey’s knowledge. Bryan Bailey directed Sensing to falsify patients’ income and expenses to make it appear that they were indigent. Sensing sent via facsimile the forged and falsified documents to Bryan Bailey, who caused the claims to be submitted for payment. Sensing, who previously pleaded guilty to conspiracy to commit healthcare fraud and pay illegal kickbacks, testified in the government’s case.

"This type of criminal activity speaks to the core of why the Tennessee Bureau of Investigation began its Medicaid Fraud Control Unit," said Director Mark Gwyn. "The Tennessee Bureau of Investigation will continue to pursue those who are defrauding the Medicaid system and taking advantage of vulnerable Tennesseans in need of these services."

"We always appreciate the opportunity to work with multi-state law enforcement agencies to combat healthcare fraud and protect our citizens’ resources and tax dollars," said Jim Hood, Attorney General of Mississippi.

"This verdict sends a strong message; members of the Bailey family each face up to 20 years in prison for crimes costing taxpayers millions of dollars," said Derrick L. Jackson, Special Agent in Charge for the Office of Inspector General of the U.S. Department of Health and Human Services. "We will continue to work with our law enforcement partners to investigate individuals who profit from preying on unsuspecting beneficiaries."

The Baileys caused more than$4 million in billing of power wheelchairs and back braces to be paid by taxpayers. During the time the Baileys worked at Jaspan and the other companies, they received more than $1.2 million in salary and sales commissions.

Sandra Bailey and Bryan Bailey each face up to 20 years in prison and a fine of up to $250,000. Calvin Bailey faces up to five years in prison, and a fine of up to $250,000. There is no parole in the federal system.

This case was investigated by the U.S. Department of Health and Human Services – Office of the Inspector General, the Federal Bureau of Investigation, the Tennessee Bureau of Investigation, and the Attorney General’s Office of Mississippi.

Assistant U.S. Attorneys Stuart Canale and Matt Wilson prosecuted this case on the government’s behalf.