N.C. Behavioral Health Company Pays $4.7 Million Settlement in State Medicaid Fraud Case and Owner Goes to Prison

Last month, North Carolina Attorney General Jeff Jackson announced that his office had reached a consent judgment of over $4.7 million with Kernersville-based healthcare provider Steven Osbey to resolve an alleged Medicaid fraud scheme.

💰 What Happened

According to Attorney General Jackson’s press release, Reign & Inspirations, LLC—a behavioral health company co-owned by Steven Osbey and Aljihad Shabazz—allegedly billed the state’s Medicaid program for in-home provider visits that never took place. According to the state, between 2017 and 2020, the company falsely claimed:

• Over 30,000 hours of home visits
• Days where one provider billed for more than 100 visits
• Hourly 60-minute visit blocks that were purely fabricated

⚖️ Legal Action & Penalties

As a result of the investigation, Reign agreed to the following:

• A civil consent judgment totaling $4.7 million;
• In a related criminal case, co-owner Aljihad Shabazz pled guilty in November 2024 and was sentenced to 52 months in prison, two years supervised release, and ordered to pay $4.7 million in restitution.

The civil component of the settlement was brought pursuant to the Federal and North Carolina False Claims Acts, both of which allow for treble damages and per-claim civil penalties.

👥 Coordinated Investigation Effort

The press release noted that the settlement stems from a collaborative investigation involving:

• NC Attorney General’s Medicaid Investigations Division (MID);
• The U.S. Attorney’s Office for the Western District of North Carolina;
• Federal agencies including the FBI and IRS‑Criminal Investigation.

This settlement is an important reminder for all healthcare providers that submitting false or fraudulent claims to Medicare, Medicaid, or any other federal healthcare program can result in significant civil, administrative, and even criminal liability.  It is imperative that healthcare providers adopt a compliance program to ensure proactive compliance before significant issues arise, regardless of their size or speciality.  And when significant issues do arise, providers should consult with experienced healthcare counsel carefully consider whether to self disclose such issues to the proper agencies.

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The attorneys at Chilivis Grubman represent healthcare providers of all types and sizes in connection with False Claims Act investigations and litigation. If you need assistance with such a matter please contact us.