3 In MN Indicted In Medicaid Fraud Scheme Targeting Homeless Clients

MINNEAPOLIS — Three Minnesotans have been federally indicted in a scheme to defraud Medicaid and other health care programs through a drug and alcohol treatment center, according to the U.S. Attorney’s Office.

The defendants, Shawn Ashley Grygo, 37, of Forest Lake, Shantel Rene Magadanz, 34, of Stacy, Minnesota, and Heather Lynn Heim, 46, of St. Paul are accused of operating a scheme through Evergreen Recovery, Inc., an outpatient treatment center.

Grygo, Magadanz, and Heim each face one count of conspiracy to commit wire fraud and nine counts of wire fraud. Grygo is also charged with three counts of money laundering. Magadanz and Heim made their initial court appearances on Dec. 19 and were released under conditions, including a prohibition on contacting former clients and employees of Evergreen Recovery.

Grygo is scheduled to appear in court on Monday.

Between March 2018 and July 2024, the defendants overbilled for treatment services that were not provided, ineligible for reimbursement, or made mandatory as a condition of free housing offered as a kickback, authorities said.

The defendants recruited Medicaid-eligible people from homeless shelters, residential treatment programs, and probation offices, enticing them with free housing in Evergreen-controlled sober homes, according to investigators.

Clients were required to attend at least five group counseling sessions and one individual session per week to retain their housing. If clients did not comply, the defendants threatened eviction and removal of their belongings, authorities said.

The defendants are accused of fabricating health records to maximize fraudulent claims, including creating electronic entries weeks or months after the supposed services.

On at least one occasion, they worked overnight before a licensing regulator visit to create hundreds of false chart entries, authorities said.

Additionally, staff members, known as Peer Coaches, were reportedly directed to misrepresent their interactions with clients to further inflate billing, according to prosecutors.

The charges result from an investigation by the FBI and the Office of Inspector General for the U.S. Department of Health and Human Services, with assistance from the Medicaid Fraud Control Unit of the Minnesota Attorney General’s Office.