Oregon Woman Sentenced to 4 Years for $2 Million Medicaid Fraud

A 55-year-old Oregon woman has been sentenced to four years in federal prison for orchestrating a $2 million healthcare fraud scheme. Using stolen identities and false claims, Darla Kay Byus manipulated the system to fuel her gambling addiction and acquire multiple properties. Here’s what we know.

A Scheme Built on Lies

From January 2019 to August 2021, Byus carried out a plan to defraud Oregon’s Medicaid program. Operating through her business, Choices Recovery Services, she billed the Oregon Health Authority for over $1.5 million in substance abuse treatment services that were never provided. To do this, Byus stole the identities of at least 45 individuals, including names pulled directly from jail rosters, to submit fake healthcare claims.

Assistant U.S. Attorney Joseph Huynh described the scheme as one fueled by “greed and her gambling addiction,” according to Oregon Live. Byus also filed fake tax returns to further conceal her crimes.

Millions Stolen, Millions Spent

Byus didn’t stop at gambling away the stolen funds. She also purchased four properties, including a ranch she had reportedly intended to use as a retreat for individuals recovering from addiction. These properties, located in Prineville and John Day, are now subject to government seizure as part of efforts to recover the stolen funds.

Despite her actions, Byus claimed she struggled with how to stop the fraud while maintaining her ability to help others through her business. However, Judge Michael J. McShane pointed out that this was no momentary lapse in judgment - it was a years-long scheme.

A Childhood Marked by Trauma

During her sentencing in Eugene’s federal court, Byus’ defense highlighted her challenging personal history, including a traumatic childhood, sexual abuse, and mental health struggles such as bipolar disorder and post-traumatic stress. These factors were considered in determining her sentence, but the gravity of the crime outweighed any mitigating circumstances.

Her attorney, Kurt David Hermansen, argued for a reduced sentence, claiming another individual in the business had influenced Byus’ actions and that Choices Recovery Services was poorly managed. However, the court ultimately rejected this plea, holding Byus accountable for her deliberate and sustained criminal activities.

Prison Time and the Fight for Restitution

In September 2024, Byus was sentenced to four years in federal prison and has been ordered to pay over $2 million in restitution to the Oregon Health Authority, as reported by The Oregonian. The government will also attempt to recover funds through the sale of the properties she purchased with her fraudulent gains. As Byus begins her prison sentence, efforts to recover the stolen funds continue, aiming to bring some measure of justice to a scheme that harmed countless individuals and misused public resources.

References: Oregon woman pulled names from jail rosters to submit fake healthcare claims in $2 million fraud | Oregon Woman Sentenced to Four Years for Committing Fraud ‘To Feed Her Greed’