LLOYD WARFORD: The deputy AG said he was 'reasonably certain' that more people will be charged. BRIAN CHILSON

On Wednesday, the deputy attorney general leading the state’s Medicaid Fraud Control Unit confirmed to reporters that his office is investigating Arkansas legislators who have not yet been charged by federal or state prosecutors in the ongoing fraud and corruption scandal at the Capitol. The comments were made by deputy AG Lloyd Warford during an afternoon press session hosted by Attorney General Leslie Rutledge.

Yesterday, the MFCU announced the arrest of Helen Balding, a former billing director for Preferred Family Healthcare, the state’s largest behavioral health provider. The charges against Balding mirrored those brought in July against Robin Raveendran, a PFH executive accused of orchestrating a scheme to defraud the state Medicaid program of some $2.2 million over a two-year period. Raveendran’s arrest led to Arkansas cutting off Medicaid reimbursements to PFH and ending state contracts with the Missouri-based nonprofit.


Those two Medicaid fraud arrests — on state charges — have also been linked to a broader federal investigation into corruption at the Arkansas legislature centering on Rusty Cranford, the former head of PFH’s operations in Arkansas and a former lobbyist. Cranford admitted in a June plea agreement to bribing multiple state lawmakers for the purposes of influencing public policy while simultaneously conspiring with former top officials at PFH to embezzle money from the nonprofit. Four former legislators (two Republicans, two Democrats) have pleaded guilty to accepting kickbacks from Cranford or have been convicted by federal prosecutors. At least one sitting legislator, Sen. Jeremy Hutchinson (R-Little Rock), is implicated in Cranford’s plea but has not been charged. (Last week, David Ramsey wrote a detailed account of the Cranford scandal for the Arkansas Nonprofit News Network.)

Asked whether more indictments are coming, Warford said today he was “reasonably certain there will be more people charged, either by us or the feds. While our investigation is separate from the federal investigation, we have communicated with them about our targets and their targets, and to some extent there’s been some cooperation.”


When a reporter asked whether the MCFU was investigating any legislators, Warford paused, then replied, “yes.” He also confirmed that the investigation included legislators who have not yet been charged.

However, he and Rutledge hesitated to give further specific details, such as how many lawmakers are under scrutiny at the moment. “As soon as we can make all this public we absolutely will,” Rutledge said, “but I don’t want it to say there’s X number now and then … when we actually file charges, it’s a number smaller or greater than that.”


She also noted the sheer scale of the investigation. Warford said the MCFU was combing through “four million documents” being held “in a vault that we’ve created … [and] another 200 GB of data that we’ve pulled out of DHS for the same purpose.”

“We’re going to follow the facts wherever they lead,” Warford said. “There’re legislators who were closely associated with Cranford. There’re legislators who were in business with Cranford. There’re legislators who were routinely receiving money for one thing or another from Cranford. Whether those transactions were illegal or not is all under investigation.”

He cautioned later that an investigation doesn’t mean the individual in question is guilty. “We need to be careful to remember that. Just because somebody’s finances are being looked at does not mean they’ve committed a crime,” he said.

Warford also confirmed that the unit is investigating possible Medicaid fraud schemes at other behavioral health providers besides Preferred Family Healthcare.


And, when asked whether the investigation is examining illegal practices other than the specific scheme described in the Raveendran and Balding affidavits — the $2.2 million they are alleged to have misappropriated was derived only from a certain subset of “dual eligible” beneficiaries, not all Medicaid transactions — he again answered simply, “yes.”

Warford implied that his unit has found instances of wrongdoing that wouldn’t fall under the category of “Medicaid fraud” but may suggest elected officials crafting public policy for illicit personal gain.

“Candidly, a lot of what was done was done with the blessing of the legislature and the blessing of DHS, so when [regulations] are promulgated to allow a certain thing to happen a certain way, and it is [then] done that way, it would not be Medicaid fraud. It might be wasteful and inappropriate. It might be something that needs to be reconsidered by the administration — but that would not be fraud,” he said.

Raveendran’s affidavit, he noted, includes mention of what appears to be massive Medicaid overspending for group psychotherapy. Arkansas DHS paid out vastly more for this category than other states.

“If you read the affidavit, you’ll see there’s about $148 million worth of what I would consider to be waste, where we’re paying much more for group psychotherapy than we should be paying. Mr. Cranford had a lot to do with keeping those rates in place and allowing that system to be in place, but all of that was approved by the powers that be at the time, so that would not be considered Medicaid fraud. Now, that might show up in a federal investigation of public corruption; it would not be a part of what we’re doing.”

Warford also said Medicaid fraud convictions in general have increased dramatically in the past few years. “Since General Rutledge’s administration began, we have convicted 59 people of fraud-related charges. … [That’s a] significant uptick in what we’re doing as far as Medicaid fraud is concerned, and we’re proud of that. We are currently prosecuting 36 individuals in 30 different criminal cases.”