Grand jury to hear
charges of Medicaid
fraud in Felix case

Thousands of dollars of services
allegedly were never provided
to special-ed students

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By Crystal Kua
ckua@starbulletin.com

An Oahu grand jury was expected to hear evidence today on alleged Medicaid fraud related to the Felix consent decree, sources close to the investigation say.

If the grand jury returns an indictment, it would be the first criminal charges brought in connection with the consent decree. In 1994, the state agreed to improve educational and mental health services for special needs students.

The allegations focus on thousands of dollars in questionable charges by private contract providers to the state for services that were never provided to a special-needs child, a source said.

The state Attorney General's Medicaid Investigations Division has been investigating the case since last year.

Supervisor Dewey Kim declined comment last night.

State Attorney General Earl Anzai could not be reached for comment.

But in a letter made public earlier this year, Anzai reported that the Medicaid Investigations Division has been investigating "suspected improprieties" in Medicaid and Quest billings from providers of services to children covered by the Felix consent decree since as early as last summer.

The letter also indicates that the investigation into possible Felix-related wrongdoing started months before a legislative investigative committee forwarded its findings to the Attorney General's Office for a separate probe by the office's Criminal Division.

The Joint Senate-House Investigative Committee spent last year examining state spending related to the state's efforts in trying to comply with the consent decree.

The attorney general is also defending the governor and the state departments of Health and Education in the Felix lawsuit, which brought about the consent decree.

Plaintiffs including special needs student Jennifer Felix alleged that the state was in violation of federal law by not adequately providing appropriate services to special education students.

Concerns about conflicts-of-interest in the attorney general's multiple roles in the consent decree led U.S. District Judge David Ezra to announce earlier this year that he would be referring a copy of the investigative committee's report to the U.S. Justice Department and the city Prosecutor's Office for a criminal review.

Last month, court-appointed monitor Ivor Groves lauded the state for improvements in the special-education system. He also recommended reduced oversight of the system by the federal court.