Woman has to repay $121,000 in fraud case

The Daily Inter Lake

The Kalispell business owner convicted of defrauding insurance companies and area health-care providers out of tens of thousands of dollars has been sentenced to a year in prison.

Kathleen A. Hunnewell, 44, also was ordered to pay more than $121,000 in restitution and spend six months after her incarceration on house arrest.

She was sentenced last week in U.S. District Court in Missoula.

As the owner of Physician's Billing Service, Hunnewell billed insurance companies and patients on behalf of area health-care providers and then pocketed portions of the reimbursements, according to federal court documents.

Hunnewell, who pleaded guilty in January to mail fraud and filing false income tax returns, ran the scheme from at least December 2000 until October 2003.

According to prosecutors, Hunnewell would conceal the fraud by providing false billing and payment information to doctors and by hiding the actual payment records.

Investigators were able to track several insurance company reimbursements, including payments from Blue Cross and Blue Shield of Montana and Medicaid, that Hunnewell diverted directly into her bank account.

The Internal Revenue Service believes that Hunnewell failed to report more than $200,000 she made on the scheme in her 2001, 2002, and 2003 federal income tax returns.

In 2003 alone, investigators say, Hunnewell's bank records showed she earned more than $60,000 in unclaimed income.

Hunnewell initially was charged with five counts of mail fraud and three counts of filing false income-tax returns.