The federal court in Minneapolis indicted a former state supervisor of a Medicaid records division for embezzling nearly $1 million in state health care funds. Kim Joanne Austen, 47, allegedly committed the fraud by sending dozens of checks to a phony vendor starting in 2003, the indictment states.

By submitting fake invoices to the accounting system linked to the system she supervised, Austen collected 23 Medicaid checks totaling $903,896.54 after taxes ($1,164,071.85 before taxes) written out to the fraudulent company.

The Minnesota Department of Human Resources launched an internal investigation after contacting federal authorities to report its “suspicions of an employee allegedly misappropriating funds.” At that time, the department placed Austen on “investigatory leave” and blocked her access to all the state’s systems.

Austen turned herself in on October 20, 2008. The court charged Austen with one count of health care fraud and 22 counts of “embezzlement in connection with health care.” Austen faces up to ten years in prison for each count. The department’s commissioner Cal Ludeman stated that the agency is currently working to improve its internal controls and payment policies.

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