MEDICAID STING: 32 PEOPLE CHARGED WITH MEDICAL ASSISTANCE RECIPIENT FRAUD

WHITEVILLE | At least two dozen people were arrested in Columbus County on
Wednesday, charged with selling their Medicaid cards to drug dealers who
then used the cards to get cut-rate narcotics from pharmacies and sell them
on the street at an enormous profit.

Columbus County Sheriff Jimmy Ferguson explained that in all, 32 people
from Whiteville, Chadbourn and Tabor City have been charged with 53 counts
of medical assistance recipient fraud. Some are charged with felonies and
some with misdemeanors, depending on the dollar amount of the fraud.

Tuesday, federal, state and local law enforcement officers arrested 24
people, ranging in age from 21 to 63, saying the defendants had illegally
sold their Medicaid prescription cards for $20 to $200. Warrants were
issued charging nine other people with the same crime, but they had not
been served by press time. One investigator said a similar ring had been
caught in South Carolina, but Sheriff Ferguson said he believes this is the
first operation of its type in North Carolina.

WHAT THEY FOUND

Columbus County Detective Sergeant Brent Lanier explained that welfare
recipients along the Columbus County-Horry County, S.C., line sold their
Medicaid cards to people who then forged prescriptions for heavy drugs -
usually OxyContin, known as "hillbilly heroin."

With the Medicaid card, the forger would only have to pay $3 for a
prescription, which he would then break up, selling the pills individually
for $80 apiece. Using the Medicaid card increased the profit margin, Sgt.
Lanier said; instead of having to pay $800 to get a forged OxyContin
prescription filled, the forger would only have to pay $3 for the same drugs.

The government was left to pick up the balance of the tab, costing county
taxpayers in excess of $1 million over the past year, Sheriff Ferguson
estimated. The only people arrested in Tuesday's roundup were those who
allegedly sold their Medicaid cards. More arrests are expected as
investigators move up the supply chain to the card buyers, the prescription
forgers and the drug dealers.

The bigger fish will probably face federal charges, while those arrested
this week will go to state court, Sgt. Lanier said. "This is not the end
of the investigation," Sheriff Ferguson said. "This is the beginning."

HOW THEY FOUND IT

Jean Jacobs, Teresa Sellers and Sheila Dorsett, investigators with Columbus
County's Department of

|Social Services, said that several months ago, they started getting calls
from pharmacists who were suspicious of OxyContin prescriptions that they
were receiving.

They turned the information over to an investigator and pharmacist with the
state's Division of Medical Assistance in Raleigh. The investigator found
that there were an inordinate number of OxyContin prescriptions originating
from welfare recipients in Columbus County, Ms. Jacobs said.

In fact, Medicaid was being used for OxyContin in Columbus County more
frequently than anyplace else in the state, Ms. Sellers added.

Also suspicious was that Columbus County Medicaid patients seemed to be
filling their prescriptions outside the county - in Charlotte, Clinton,
Fayetteville and elsewhere.

The investigation ultimately reached out from law enforcement in Columbus
County to the state bureau of investigations, the Drug Enforcement
Administration, the Department of Health and Human Services and the
Department of Justice.

The joint investigation culminated in Tuesday's roundup.

The three Social Services investigators said that by the end of May, they
had recovered nearly $146,000 in fraudulent claims. More will come with
Tuesday's arrests.

WHO THEY ARRESTED

Each person charged with selling his Medicaid card faces either a felony or
a misdemeanor, the level of the charge depending on the amount the county
had to pay - in excess of the $3 co-pay - to fill the forged prescriptions.
Those charged with more than $400 in fraud faces a felony.

Since each welfare recipient receives a new card every month, some of the
defendants face several counts, accused of selling several of their monthly
cards.

Each defendant's bond was set at $750 for a felony charge and $300 for a
misdemeanor.

Groups of the defendants lived in the same neighborhoods or in close
proximity, Sheriff Ferguson said.

Some of those who were picked up Tuesday said they were also victims of the
drug ring.

Elizabeth Smith sat angry and tired inside Seller's Bail Bonding, waiting
for her son, Joseph Miller, to sign the papers necessary for his release.

Ms. Smith, 46, of Miller Road in Tabor City, said law enforcement officers
surrounded her house Tuesday morning, then burst in with the media, looking
for her son. They turned her house inside-out before finding her son in his
own house, four doors down, she said. And she wants an apology.

Meanwhile, Joseph Miller, 23, interjected from the bondsman's countertop
where he awaited his paperwork. He was pepper-sprayed while he slept, he
said, and besides, his Medicaid card was stolen from his mailbox. He didn't
sell it to anybody.

Mr. Miller is charged with selling two of his monthly cards, leading to
fraud in the amount of $1,360. That means he faces two felonies.

His mother said he can't read or write more than his name, and that he
didn't report the cards stolen because he doesn't need to go to the doctor
very often. He just doesn't need the cards much.

Annie Dixon, 39, also of Miller Road, is one of five people in her family
who was charged in Tuesday's round-up. Not only was her mother was
arrested, but agents surrounded her sister in a field, and arrested her as
she bent over to pick butter beans.

Ms. Dixon said she didn't sell her card - she never got it. She said she
lives about a half-mile from Mr. Miller and his mother, and many of those
arrested live in the same area of Tabor City.

For Sheriff Ferguson, the stolen card theory doesn't hold water because
none of those arrested had reported their cards stolen prior to Tuesday's
round-up.

All 24 defendants are due in court in Columbus County today.