'This is Nuts': Colorado Lawmaker Takes Action After Business Owner Loses Nearly $50,000 Over Two Emails Lost In Spam Folder

DENVER (CBS4) - The state clawed back nearly $50,000 from a Colorado small business owner after she failed to respond to two notices for an audit. She says the emails went to her spam folder.

Nicole Schiavone, owner of Wildflower Assisted Living, has cared for people with brain injuries for 15 years. Most of them are Medicaid recipients, so when the state sent her an email last year notifying her of an upcoming audit she confirmed receipt and then waited for an email requesting documentation.

"Then didn't hear anything, and COVID hit and so I was like, 'maybe they're not doing them.'"

Turns out, she was wrong. The state sent two subsequent emails.

"The notice went into my spam," said Schiavone.

By the time she found out, she was out nearly $50,000 after the state took the money back.

"I said 'Hey guys, what's going on? You have my phone number. You have addresses of all my locations as well as my billing address. You could have sent a letter.'"

State Sen. Jeff Bridges was stunned.

"I took a look at it, and said 'yea, this is nuts. It has to get fixed.'"

He introduced a bill that requires the state to notify Medicaid providers of an audit with an email, letter and phone call before recouping the money.

"For me this is about good government," said Bridges. "Governments need to be accountable in order to have the trust of the people represent. This was brought to us. We said 'you're right this isn't the way government should work,' and here we are fixing it."

While the bill fixes the notification system going forward, Schiavone is out of luck and out nearly $50,000.

"There's no way in the Medicaid industry to make that money up."

A spokesperson for the state department that oversees Medicaid says he was unsure if there were other providers who'd had similar experiences, but, he says, providers are notified of an audit via their preferred method of communication.

He says once the audit deadline has passed, the law requires them to recoup the money that's unaccounted for, regardless of the reason.

The bill passed its first committee.