Ex-owner of CT behavioral health agency avoids prison in health insurance fraud case. But she owes nearly $300K.

A New Hampshire woman has agreed to pay nearly $300,000 in restitution after authorities say she defrauded the Medicaid program out of thousands of dollars when she was the owner of a Connecticut behavioral health agency.

Kelly Ann Stutzman received a three-year suspended sentence in Hartford Superior Court on Monday after pleading no contest to one count of health insurance fraud. She will serve five years of conditional discharge, a Hartford judge ordered Monday.

A day after Stutzman faced sentencing, federal and state officials announced she and her business, Hamden-based K-Assist, LLC., entered into a civil agreement. The state and federal governments will receive about $234,000 in restitution under the terms of the agreement to resolve allegations that Stutzman violated the False Claims Act, authorities said.

“Kelly Stutzman and her company K-Assist repeatedly billed the Connecticut Medicaid program for thousands of hours of services she claimed to have provided but were instead provided by unlicensed individuals,” Connecticut Attorney General William Tong said. “In addition to the civil settlement, she also pled nolo contendre to a criminal charge related to her participation in the Medicaid program. In conjunction with our state and federal partners, we will act aggressively to ensure our Medicaid dollars are used appropriately for the benefit of Connecticut patients.”

According to authorities, between March 2016 and December 2019, behavioral health service claims submitted by Stutzman were provided by interns and unlicensed individuals, though Stutzman was submitting billings as if she provided licensed qualified services. Stutzman also billed for services while clients were inpatient or in skilled care facilities and services were not performed, officials said.

Federal officials said they uncovered evidence of repeated billing for excessive services, including hundreds of instances in which Stutzman claimed to have provided more than 12 hours of behavioral health services in a single day.

In connection with the criminal case, authorities said, Stutzman was ordered to pay about $63,000 in restitution. A judge in Hartford also ordered that she not act as a provider in the Medicaid program.

According to the State of Connecticut Division of Criminal Justice, by being found guilty of a program-related felony, Stutzman is subject to mandatory exclusion as a health care provider to certain federally funded health programs pursuant to federal and state laws and regulations.

Judicial officials said Stutzman no longer owns K-Assist.

“Defrauding the Medicaid program is a serious offense and we applaud the work of the Attorney General’s Office in aggressively addressing wrongdoing in the Connecticut Medicaid Program,” Department of Social Services Commissioner-designate Andrea Barton Reeves said.

Reeves added, “We appreciate the Attorney General’s efforts to assure the integrity of the Connecticut Medicaid Program, making sure that its resources are used to support Connecticut’s residents and not to enrich those who seek to abuse the system.”

The case against Stutzman stems from a larger investigation into fraudulent activity in the area of behavioral health services, which has been jointly conducted by the Office of the Inspector General of the U.S. Department of Health and Human Services, the Medicaid Fraud Control Unit of the Chief State’s Attorney’s Office and the Connecticut Office of the Attorney General, with support from the Connecticut Department of Social Services, officials said.