Jackson, TN – Following his conviction at trial by a federal jury of conspiracy and wire fraud, Bryan Bailey, 39, of Milan, Tenn. was sentenced by Chief United States District Judge S. Thomas Anderson to 84 months imprisonment, followed by three years of supervised release, and a $200 special assessment. Bailey was also order to pay more than $1.9 million in restitution to Medicare, Medicaid and private insurance companies.
Bryan Bailey was convicted following more than three weeks of trial in February 2018 of both counts charging him in the indictment. His mother, Sandra Bailey, 67, of Jackson, was convicted of 16 counts, including conspiracy, health care fraud, and paying illegal kickbacks in connection with health care services. His father, Calvin Bailey, 67, of Jackson, was convicted of conspiracy. 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 ("JMS"), 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 JMS, 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 JMS, 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.
"Kickbacks pervert medical decision-making by encouraging health care providers to order things that patients do not need," said Derrick L. Jackson, Special Agent in Charge at the U.S. Department of Health and Human Services, Office of the Inspector General in Atlanta. "This defendant pushed the sale of expensive power wheelchairs by paying patient recruiters and others which was a blatant violation of the law."
In 2010, Bryan Bailey expanded JMS’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 under the direction of Bryan Bailey. 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 and approval. 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 had pleaded guilty to conspiracy to commit healthcare fraud and pay illegal kickbacks, testified in the government’s case.
During the time the Baileys worked at JMS and the other companies, they received more than $1.2 million in salary and sales commissions. Chief Judge Anderson found the 84-month sentence warranted because the American taxpayers were victimized by the fraudulent behavior of Bryan Bailey and the other defendants.
Sandra Bailey and Calvin Bailey are scheduled to be sentenced on August 3, 2018 before Chief Judge Anderson.
"Protecting taxpayer dollars is the heartbeat of the Tennessee Bureau of Investigation’s Medicaid Fraud Control Unit," said TBI Acting Director Jason Locke. "Working alongside our local, state, and federal partners, we will continue to pursue those who are defrauding the Medicaid system and taking advantage of vulnerable Tennesseans in need of these services."
"Health care fraud drives up health care costs, wastes taxpayer money, undermines the Medicare, Medicaid and Tricare programs, and sadly, has infected every facet of our health care system," said Michael T. Gavin, Special Agent in Charge of the Memphis Field Office of the Federal Bureau of Investigation. "Health care fraud is a crime that hurts all of us and each dollar taken from programs that help the sick and the suffering is one dollar too many. The FBI is committed to fighting fraud and protecting taxpayer dollars, and with our law enforcement partners we will continue to identify and investigate the criminals who, driven by greed, target the systems each of us depends on in our most vulnerable moments."
"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 investigation was conducted 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 for Mississippi.
Assistant U.S. Attorneys Stuart Canale and Matt Wilson prosecuted this case on behalf of the government.
Department of Justice
Office of the U.S. Attorney
Western District of Tennessee