Inside a $34M Medicaid scheme: AZ man billed state for dead patient, kids with 'alcohol dependence', AG says

PHOENIX - Three years after a massive crackdown on Medicaid fraud, the fallout continues.

Prosecutors say an Arizona man who owned a behavioral health provider raked in more than $30 million by exploiting Native American clients for their benefits. The widespread sober living scheme defrauded the Arizona Health Care Cost Containment System, known as AHCCCS, out of $2.8 billion.

What we know:

Thomas Heard, a business owner who recently pleaded guilty to two fraud-related charges, owned Heard Health Care.

According to the state’s sentencing memorandum, Heard Health Care billed AHCCCS for clients who were incarcerated at the time, claimed alcohol abuse treatment for children, and even billed for a client who was dead.

Following a court hearing on May 7, the 47-year-old Heard walked out of court, shielding his face with a manila folder and refusing to answer questions about the staggering $34.8 million Medicaid fraud case.

It's a far cry from the image portrayed just a few years ago on his Facebook profile, which showcased him as a YouTuber hosting a gospel radio show.

In June 2024, a grand jury indicted Heard, his wife Kanisha, Alexis Small, and Heard Health Care on a slew of charges, including conspiracy, theft, money laundering, and identity theft. The Arizona Attorney General's Office is prosecuting the case.

Court documents reveal Heard Health Care submitted claims for just over 150 AHCCCS members using a highly repetitive billing pattern. The blanket diagnosis for those clients was "alcohol dependence, uncomplicated."

Dig deeper:

One of the victims in this scheme is Pamela Vaden. She was not a client, but a counselor who actually worked for Heard Health Care.

"Although this is a financial case of millions of dollars that was misappropriated and stolen from insurance, it's also millions of dollars of people's lives and feelings that were attacked and victimized," Vaden said.

Prosecutors say from July through August 2023, Heard used Vaden’s identification to register her name as a member of an entity through the Arizona Corporation Commission. Court documents reveal that one woman who was a member of the Fort Apache Indian Tribe never received services at Heard Health Care, but the company billed the state for services provided from March 6 to April 14 of 2023. The red flag emerged because that woman died on March 6, yet AHCCCS paid Heard Health Care $33,000.

During the investigation, multiple families told the Attorney General's Office that they had never heard of Heard Health Care and denied ever receiving services.

"That is ridiculous. And I think that these type of people like to target people who are at a disadvantage or can't speak up for themselves. And that even goes all the way down to children," Vaden said.

'I actually feel bamboozled’

Prosecutors say Heard Health Care raked in more than $3 million just by billing for kids ranging from two to 14 years old and diagnosing them with "alcohol dependence." However, Vaden confirmed to investigators that the children were never treated for alcoholism.

"Of course, they asked me a few questions because this company had put some LLCs in my name that I have no idea of, I don't reap any benefits of," Vaden said.

Vaden also had no idea AHCCCS suspended Heard Health Care in May 2023, stopping payments due to credible allegations of fraud.

"I actually feel bamboozled. I feel like this company found someone who was extremely intelligent or had a good background in medicine and because I didn't have any street sense or financial sense about myself," Vaden said.

In December 2025, Heard pleaded guilty to two felony charges: solicitation and conspiracy to commit fraudulent schemes. But he still has not learned his fate, as his sentencing has been pushed back multiple times.

At a court appearance on May 7, an attorney stated, "The defense was prepared to go forward today, but some issues arose, and I think it’s critical that the assigned DCA be here."

Heard has two prior felony convictions: forgery and identity theft. Because of those aggravating factors, the state is now asking for a prison sentence of three years, plus seven years of supervised probation once he is released. Heard had nothing to say after the hearing.

'It's put a hold on my life'

FOX 10 Investigator Justin Lum confronted him outside the courthouse, asking, "Mr. Heard, you plead guilty. I just want to know about the $33 million taken from the state … do you have any comment at all? The sentencing’s been delayed, but you still have to appear for that … Mr. Heard, did you bill for kids who apparently had alcohol substance abuse issues?"

"Somebody should have seen those red flags to begin with," said Reva Stewart.

Stewart is a longtime advocate for Native Americans victimized by the sober living scheme, but she says AHCCCS, the state’s Medicaid agency, allowed the multibillion-dollar fraud to happen. She says it is common to hear from tribal members who were completely unaware their benefits were being used for treatment they never received.

"Now they have to backtrack and figure out, 'How in the world did they get my ID? How in the world did they choose to use my child or the death of my family member to put more money in their pockets?’" said Stewart, who works with Turtle Island Women Warriors.

Vaden says her credit is ruined, and she has faced serious financial challenges since leaving Heard Health Care.

"It's put a hold on my life until now where I basically just had to start and be an entrepreneur from scratch, which is something very powerful for me now but brand new," Vaden said.

What's next:

Heard’s sentencing is now scheduled for June 12. Kanisha Heard pleaded not guilty and is waiting for her own trial.