The former owner of a local hearing aid outlet has begun serving six months of house arrest and five years of probation in compliance with a sentence handed down last week in federal court in Juneau.
U.S. District Judge James Singleton also ordered Kenneth Klepinger, 48, to pay $141,176.20 to the state Medicaid program and to some of his patients as restitution.
The former owner of the Beltone Hearing Aid Center at the Nugget Mall was indicted in 2000 on 56 counts of fraud stemming from allegations he filed for payments from Medicaid on products or services not purchased by patients; sent false billings to patients, constituting mail fraud; and developed a money-laundering scheme to cash illegally obtained checks from his patients and Medicaid.
In September, a federal jury found Klepinger guilty of one count of mail fraud and innocent of 31 counts of fraud, and they were undecided on 24 fraud counts. In December, Klepinger pleaded guilty to one count of health-care fraud. The 23 other fraud counts were dismissed as part of the plea agreement.
"We achieved what we hoped to," said Assistant U.S. Attorney Daniel Cooper. "We obtained the same sentence we would have if we would have prosecuted him on all the counts. It was important to get at least one count of health-care fraud and mail fraud and have a sentence on record."
In court records, prosecutors gave the facts of the case.
On Aug. 25, 1998, Klepinger submitted a claim form to the state Medicaid program on behalf of a patient, asking to be reimbursed for insurance on hearing aids he claimed he ordered for her. However, he did not purchase the insurance from the vendor, prosecutors said.
Klepinger was sentenced to two concurrent five-year terms of probation during which he will be under house arrest for six months. He must stay in his house unless he is at work or church.
Defense Attorney Charles Murdter said Klepinger is determined to quickly repay Medicaid in hopes of shortening his probation time.
"We're delighted we finally reached closure," said Murdter. "This has been tremendously difficult on Ken and his family."
Klepinger's acquittal on many of the counts "speaks volumes about Ken's true nature," Murdter said.
As a result of the initial investigation into the fraud allegations, Klepinger surrendered his license to dispense hearing aids and lost his franchise agreement with Beltone.
Murdter said Denise Klepinger now runs the Hearing Center at the Nugget Mall and Ken Klepinger is seeking work in the tourism industry.
Melanie Plenda can be reached at firstname.lastname@example.org.