Office of the Attorney General News Release Archive


Wednesday, March 7, 2001

CORNYN ANNOUNCES THREE MEDICAID FRAUD GUILTY PLEAS

Austin-Area Trio Conspired to Defraud Medicaid of Nearly $600,000

AUSTIN - Texas Attorney General John Cornyn announced today that three Austin-area defendants pled guilty to charges in two schemes to defraud the state and federal Medicaid program of almost $600,000 since late 1997. Reimbursement to the Medicaid program will be addressed at a later date during sentencing.

The scheme, jointly investigated by the AG's Medicaid Fraud Control Unit, the IRS and FBI, revealed that Juan F. Herrera, Manuel J. Lara and Deborah Lyle Dysart operated a fraudulent chemical dependency clinic for juveniles in Bastrop known as Crossroads Advocacy Program. Herrera's and Lara's charges also included a similar scheme involving Life Youth Services owned by Paul G. Butler, Jr., who was indicted separately and pled guilty to health care fraud in July 1999 but has not been sentenced.

Lara, Herrera and Butler also worked at an Austin chemical dependency clinic known as Genesis Advocacy Program, owned by Lawrence V. Davis, Jr., who, like Butler, was indicted separately and has pled guilty.

"These individuals not only conspired to steal money from Medicaid using phony billing schemes, they also exploited children and gave false information about these children to secure ill-gotten gains," said Attorney General Cornyn. "They deserve the fullest measure of punishment allowed by our criminal justice system."

In the Crossroads case, Dysart, Herrera and Lara split the profits three ways and used the company as a front for the illegal billing scheme. Lara left Crossroads in August 1998 and joined Herrera working for Butler at Life Youth Services, leaving Dysart and Herrera to split Crossroads' profits 50/50.

In all instances, the defendants hired counselors to give the appearance of legitimacy but engaged in fraudulent overbilling to obtain Medicaid reimbursement. Evidence also shows that they created fictitious patient files for which reimbursement was claimed. They promoted their facilities to parents of eligible juveniles as a "free" after-school recreational and tutoring service. However, at the same time, the defendants had falsely certified to the Texas Commission on Alcohol and Drug Abuse that the children were chemically dependent and in need of billable treatment. The operators then created fictitious client files purporting to have provided counseling sessions, followed by claims for Medicaid reimbursement.

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Contact: Mark Heckmann, Tom Kelley or Jane Dees Shepperd at (512) 463-2050.
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