Colorado Medicaid is alerting employers about a possible scam where employers or their payroll departments receive a letter or court documents claiming to be a “Medicaid Reimbursement Plan Garnishment,” or similar language. A news release issued by the Colorado Department of Health Care Policy and Financing states scammers may request the employer set aside a large percentage or even 100 percent of the employees’ wages to cover a “Medicaid garnishment.”

Colorado Medicaid is investigating at least one incident involving a Front Range employer. The employer unwittingly diverted 100 percent of an employee’s paycheck to an overseas account where the funds may no longer be recoverable.

“Employers who divert these funds get scammed because they continue to owe the impacted employee their paycheck and end up paying twice. The scam appears to involve sending employers a fraudulent letter or fabricated court documents, possibly including a fictitious court case number,” according to the release.

 The department offered the following tips to protect employers and employees:

  • Always verify garnishment documents that look suspicious.
  • Contact the court to verify the case number if one appears.
    • Independently look up the telephone number for the court jurisdiction and speak with the court clerk’s office.
    • Do not rely only on contact information contained in the materials – it may be fraudulent.
  • Garnishments initiated by the state and the IRS can be verified by contacting the federal or state agency involved.

“Employers should never respond to telephone calls about their employees owing Medicaid reimbursement through a garnishment,” according to the release.

Other employers who may have fallen victim to this scam should contact local law enforcement.