Kansas City-area government employees accused of $300k health insurance fraud scheme

Kids' activity allegedly falsified for incentives

KANSAS CITY, Mo. - Seven local government employees are accused of running a health insurance fraud scheme involving hundreds of coworkers and their dependents.

Six Kansas City, Mo., employees and one Jackson County corrections officer were indicted Wednesday.

The suspects are accused of helping hundreds of other government employees defraud their health insurance program, Blue Cross and Blue Shield of Kansas City, of more than $300,000, according to the U.S. Attorney's office. The workers allegedly lied about leading an active lifestyle -- including running marathons and participating in triathlons and Olympic lifting competitions -- for cash incentives.

Prosecutors say the seven employees falsified activity records for their coworkers in exchange for a cut of the rewards.

Some examples of the alleged fraud: A 3-year-old covered by the plan, identified only as N.M. in court documents, was entered as having participated in two duathlons, three marathons, three half-marathons and four triathlons for 2010-2011. A 2-year-old was submitted as having completed three marathons and one triathlon in the same year.

And a 1-year-old was reported to have completed a triathlon, a marathon and a duathlon.

Court documents indicate a single employee is responsible for more than half the fraud.

According to the indictment, 42-year-old Crystal Burgin-Woods, a city court employee, fraudulently obtained 383 gift cards worth $185,655.

Matt Stivers, 41, an employee of the city's information technologies department, obtained 248 gift cards worth $39,070; Kim Blair, 36, with the city's parks and recreation department, obtained 238 gift cards worth $30,485; Matt Tholen, 29, an emergency medical technician, obtained 144 gift cards worth $17,600; Michael Olukotun, 39, a corrections officers at the Jackson County jail, obtained 71 gift cards worth $16,480; Michael King, 30, an employee of the city's water department, obtained 79 gift cards worth $12,745; and Sylvia Sims, 37, also with parks and recreation, obtained 90 gift cards worth $8,925, the indictment states.

They were all charged with three counts of wire fraud. If convicted of all charges, they would each face up to 60 years in prison and a $750,000 fine.

READ | Federal indictment http://bit.ly/SkCj4I

Burgin-Woods told 41 Action News she didn't know she was breaking the law -- she was simply trying to help her coworkers access their insurance benefits. She said she would enter their activity and fill out the required online survey for them, which took about an hour. In exchange, Burgin-Woods said she would pocket $50 of the $250 reward.

She said her supervisors were all aware of what she was doing.

More than 1,200 gift cards valued at $310,960 were issued as a result of the scheme.

The employees were able to get the gift cards as part of their health insurance's Points to Blue wellness program, which awards members points for physical activity. The more strenuous the activity, the more points earned.

Prosecutors say city and county workers started lying to get gift cards within the first six months of the wellness program's existence.

Six of the indicted employees made their first appearance in federal court Thursday afternoon. The seventh, Kim Blair, is currently out of town.

According to the city, no public funds were used as part of the alleged insurance fraud scheme.

"We are very saddened with the allegations brought upon a small group of City employees," City Manager Troy Schulte said in a statement Thursday. "These alleged actions do not represent the majority of City employees who adhere to the City's ethical standards."

Schulte said the city is cooperating fully with authorities.

Fred Siems, Chief Administrative Officer for Jackson County, said the one indicted county employee has been suspended without pay.

"Jackson County has been fully aware of an on-going investigation by the Federal Government that involves one of our county employees. This employee has been placed on leave without pay, pending a final determination as to their job status," he said in a statement released Thursday. "The county has been fully cooperating with authorities throughout this process and will continue to do so as it moves forward. Per county policy, we can not comment any further."

The investigation was conducted by the U.S. Postal Inspection Service Task Force, the U.S. Immigration and Customs Enforcement's Homeland Security Investigations unit and the Overland Park Police Department.

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Lisa Benson contributed to this report.

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