Detroit Psychologist Paul L. Smith Gets 51 Months Prison for Health Care Fraud

January 13, 2020

A Detroit psychologist was ordered to spend more than four years in federal prison for overbilling an insurance company more than $3 million partly to fund opening a Michigan hotel. He also attempted to expand a museum in his hometown.

Paul L. Smith, who most recently practiced in Shelby Township, received 51 months behind bars last Tuesday from Judge Judge Bernard A. Friedman after pleading guilty to health care fraud and unlawful monetary transactions, according to U.S. Attorneys.

Smith submitted approximately 1,700 false claims for neuropsychological testing and 140 false claims for psychological testing from January 2015 to February 2018, the indictment says.

Smith, who practiced for over 20 years at various locations throughout metro Detroit, submitted claims to Blue Cross Blue Shield of Michigan for reimbursement for services that he did not provide, U.S. Attorneys said in a news release. In three years, Smith fraudulently obtained $3.16 million from Blue Cross Blue Shield. Smith subsequently used hundreds of thousands of dollars to purchase real property, liquor licenses and furniture, in his venture to become a hotelier in Arcadia in northwest Michigan, reportedly known as “Swan Resort.”

In September 2013, The Voice Newspapers reported Armada Township officials put a stop to Smith’s plan to expand the Pontiac-based Museum of New Art, or MONA, into Macomb County with the opening of a new location on his 33 Mile Road property.

Officials issued a stop-work order on Aug. 23 after it was discovered Smith had violated building requirements and zoning regulations. Building officials said Smith did not apply for permits while doing renovations on a three-story barn he planned to convert into an art museum and cultural center.

In the criminal case, in addition to the term of imprisonment, the court forfeited Smith’s interests in funds tied to the health care fraud and money-laundering schemes, liquor licenses and two pieces of real property. The court also entered a forfeiture money judgment of $3.16 million.

The case was investigated by agents of the U.S. Department of Health and Human Services and the FBI’s Office of Inspector General. It was prosecuted by Assistant United States attorneys John Engstrom and Shankar Ramamurthy.

Source: “Armada Township psychologist sentenced to four years in prison for healthcare fraud,” Iosco County Herald, January 13, 2020. URL: http://www.iosconews.com/news/state/article_17fe7cf7-ed48-57ad-aeae-cb85dd93cc0c.html