Oregon woman to serve 21 months for fraud

An Oregon woman who owned and operated a durable medical equipment company with retail stores in Portland and Vancouver has been sentenced to 21 months in federal prison for defrauding six health insurers of $1.3 million.

Saffron Gustafson, 43, was ordered to pay back all of that money and restitution of more than $99,000 in unpaid federal taxes, according to a news release from the Washington State Office of the Insurance Commissioner.

Gustafson pleaded guilty in November to federal charges of health care fraud and tax evasion.

She ran Saffron’s Specialized Medical, a medical equipment company, with stores in several Oregon communities and Vancouver. The stores sold custom compression garments to patients with circulatory medical conditions, according to the commissioner’s office.

Between June 2013 and August 2017, Gustafson submitted bills to insurers that inflated the cost of the garments by 600 percent or more. To support the false billings, she and her employees fabricated invoices from her wholesaler and destroyed the genuine invoices so insurance companies could not review them during audits.

“This case was a flagrant and egregious abuse of the health insurance system for purely selfish reasons,” Insurance Commissioner Mike Kreidler said. “Fraud drives up rates for all insurance policyholders.”