Medicaid theft investigation leads to casket company raid, arrest, release

Affordable Casket and Moanalua Mortuary
Affordable Casket and Moanalua Mortuary

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The state is investigating alleged Medicaid theft at a well-known casket and mortuary company, arresting then releasing its owner. Those associated with the firm say there’s been no crime.

When law enforcement swarmed the lot at Affordable Casket and Moanalua Mortuary last month, people in the area wondered what was going on. When KHON2 got answers, it brought up more questions of what really happened.

H-1 drivers know the landmark building well. So when midday late last month state sheriffs and investigators rolled in, it caused quite a scene. In what many described as a raid, a company representative told KHON2 they came in with a search warrant, broke up a staff meeting, took away files and two computers. They handcuffed company owner Claus Hansen and booked him at the sheriff’s Kakaako receiving site.

Hansen was released pending investigation. Hansen has not been charged.

Hansen’s attorney, Arnold Phillips, told KHON2, “There is a pending administrative investigation. The government is doing exactly what they’re supposed to and we are cooperating fully. We are anxious for the matter to be resolved.”

The sheriff’s log cites theft in the first degree, which applies whenever more than $20,000 is at stake.

So why is a place for the dead being investigated over Medicaid funds usually associated with the living?

Medicaid, administered by the state’s MedQuest division, does includes death benefits, also for dealing with unclaimed dead bodies.

A company investor who asked not to be named, but whom KHON2 verified, told us, “Somebody in the State got fragmentary information that MedQuest payments were not passed on through by the mortuary.” He says that’s not true and adds, “We have been completely transparent on every case. There has been no crime, no theft, no fraud. It would be a mistake to assume that anything illegal was done.”

He said the raid and seizure of materials was disruptive to their business operations, potentially even their reputation.

“The more they look at the what they seized,” he said, “they will realize they cannot prove intent of fraud or theft.”

The Attorney General’s office declined comment and offered no timetable on next steps in the investigation if any.

The Department of Human Services, which oversees MedQuest, also declined comment.

Both agencies did say they cannot recall any other past case in which a mortuary or casket company was investigated or charged with Medicaid theft or fraud.

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