The Attorney General’s Medicaid Fraud Control Unit filed a lawsuittoday against a Wenatchee-based company that allegedly provided fraudulent training to dozens of school districts around the state, leading to tens of millions of dollars in false Medicaid claims.

The defendants are Thomas and Sheila Reese, their company, JT Educational Consultants (JTEC), and several employees and contract consultants including Scott Adolf, Jack Hedgcock, Randall Hauff and Janine Welty.

“These scammers lined their pockets with millions of dollars meant to serve the healthcare needs of Washington children and families,” said Attorney General Bob Ferguson. “This fraud will not be tolerated. If you steal from the Medicaid system, my office will hold you accountable.”

Washington’s Medicaid program provides a critical safety net of healthcare services to low income residents. Through a reimbursement program known as the Medicaid Administrative Claiming program, participating school districts may receive Medicaid reimbursement for administrative costs they incur that directly support the provision of healthcare services to Medicaid eligible students.

This lawsuit targets a group of individuals, including former school administrators and employees, who built a grossly profitable consulting business by marketing a corrupted version of this program.

JTEC was the consulting company for the Centralia School District, which settled related allegations for $372,000 in July.

Rather than helping school districts obtain reimbursement for legitimate costs incurred helping Medicaid eligible students obtain necessary health care services, the defendants gamed the system and received millions of dollars in “consulting” fees by causing the districts to file tens of millions of dollars of false claims between 2005 and 2014.

They did this by misrepresenting the rules of the program, including in training presentations, written training materials, and other communications with the districts, so that the districts would submit false claims for reimbursement and the defendants could take a percentage of the ill-gotten funds.

When the agency responsible for administering Medicaid moved to implement a computer-based system that would have enabled districts to more easily and accurately identify costs truly reimbursable under the administrative claiming program, the defendants strenuously opposed the effort and fought hard to preserve the paper based system that was central to the survival of their unlawful enterprise.

In this lawsuit, the state will ask for the return of the ill-gotten Medicaid funds and substantial civil penalties for the false Medicaid claims.

Based upon information provided by the Reeses, MFCU investigators estimate that between 1998 and 2011 JTEC netted $12.6 million in consulting fees from school districts. In recent years, this company alone took between 6 and 8 percent of the total Medicaid Administrative Claiming reimbursement coming into the state.

Neither the Reeses nor their employees or contractors have any special Medicaid training. Most are retired school district employees.