Attorney General Ken Paxton Announces Sentencing of Houston-Area Daybreak Rehabilitation Center Owner for $15 Million Health Care Fraud Scheme

Houston, TX – Attorney General Ken Paxton has announced the sentencing of Gwendolyn Gibbs, the 72-year-old owner of the Houston-area Daybreak Rehabilitation Center, to 84 months in federal prison. Gibbs was found guilty of orchestrating a $15 million health care fraud and kickback scheme, a crime that has also resulted in her being ordered to pay $8,680,380 in restitution to government health care programs. Following her prison term, Gibbs will be subject to three years of supervised release.

Fraudulent Activities and Kickbacks

Gibbs orchestrated a scheme in which she falsified medical records and submitted false claims for services that were either never provided or not medically necessary. This fraudulent activity targeted patients, including individuals with intellectual disabilities. Furthermore, Gibbs paid kickbacks to patient recruiters and owners of group homes. In return, these recruiters and owners forced residents to attend Daybreak Rehabilitation Center, offering transportation, supervision, and meals as incentives.

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Investigative Efforts and Legal Proceedings

The investigation into Gibbs’ activities was led by Captain Stacey Overbay and Sergeant Joyce Combest of Attorney General Paxton’s Medicaid Fraud Control Unit. The investigation was conducted in cooperation with several federal agencies, including the FBI, the Department of Health and Human Services’ Office of the Inspector General, and the Railroad Retirement Board’s Office of the Inspector General. The United States Attorney’s Office for the Southern District of Texas prosecuted the case.

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Attorney General Paxton’s Statement

“This successful investigation by my office highlights our unwavering commitment to protecting taxpayers and combating fraud,” said Attorney General Paxton. “We will continue to ensure that those who exploit our health care system and steal taxpayer funding are prosecuted to the full extent of the law.”

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Medicaid Fraud Control Unit’s Achievements

Since 2021, the Medicaid Fraud Control Unit has achieved significant milestones, recovering more than $612 million in settlements, judgments, and restitution for Texas taxpayers. The unit receives 75 percent of its funding from the U.S. Department of Health and Human Services under a grant award totaling $20,944,200 for fiscal year 2023. The remaining 25 percent, amounting to $6,981,395, is funded by the State of Texas. Impressively, for every dollar of state funding, the OAG’s Medicaid Fraud Control Unit has recovered more than 49 dollars for taxpayers over the last three years.

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Ongoing Commitment to Combating Fraud

The sentencing of Gwendolyn Gibbs serves as a powerful reminder of the ongoing efforts by the Attorney General’s office to combat health care fraud and protect taxpayer dollars. The Medicaid Fraud Control Unit continues to play a crucial role in these efforts, leveraging its resources and partnerships with federal agencies to bring offenders to justice and recover funds for the state.

As the state of Texas continues to strengthen its defenses against health care fraud, the Attorney General’s office remains dedicated to ensuring the integrity of government health care programs and safeguarding taxpayer money from fraudulent activities.

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