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Feds: Company agrees to pay $150 million over Medicaid fraud charges

By Hussein Saddique, CNN
Tony West, assistant U.S. attorney general of the Civil Division of the Department of Justice, talks to reporters on Monday.
Tony West, assistant U.S. attorney general of the Civil Division of the Department of Justice, talks to reporters on Monday.
STORY HIGHLIGHTS
  • Maxim Healthcare Services is a leading provider of home health services in the U.S.
  • Prosecutors say the company submitted more than $61 million in fraudulent billings
  • Maxim says it has instituted reforms and remedial action at the company, including firings
  • The company says previous actions "did not adversely affect patient health ... or care"

(CNN) -- A Maryland-based home health services company has agreed pay a record $150 million in civil and criminal damages to settle charges that it engaged in a nationwide scheme to defraud Medicaid and other federal programs, according to federal prosecutors.

The details of the settlement with Maxim Healthcare Services were announced Monday in a press conference at the U.S. attorney's office in the District of New Jersey, in Newark.

Maxim Healthcare Services is a leading provider of home health services throughout the United States, and bills federal health care programs for care it provides to patients. "This is the largest civil recovery in a home health care services suit ever," Tony West, assistant U.S. attorney general of the Civil Division of the Department of Justice, told reporters on Monday.

The criminal complaint in the case accuses Maxim of submitting more than $61 million in fraudulent billings over a six-year period to Medicaid and the Veterans Administration for services it either did not perform, or that were not reimbursable under the programs' guidelines.

"Money that should have gone to benefit medical patients went instead to Maxim's bottom line," said Gil Childers, the acting U.S. attorney in the case.

The case came to the attention of authorities when Richard West, a Medicaid beneficiary in New Jersey, called the Department of Health and Human Services to complain about billing irregularities in his Medicaid statements, according to Tom O'Donnell, the special agent in charge at the Health and Human Services Office of Inspector General that covers the New York and New Jersey region. That one phone call helped launch the government's investigation and led to a whistleblower's complaint later filed by West, O'Donnell said.

According to the settlement arrangements released by the U.S. attorney's office, Maxim has entered into a "deferred Prosecution agreement" that allows the company to avoid a health care fraud conviction if the company takes a series of steps within the next two years to reform its corporate practices and strengthen compliance monitoring.

In addition, Maxim will pay out approximately $70 million in civil damages to the federal government and another $60 million in civil penalties that will be divided between 42 states. Maxim will also pay a $20 million criminal penalty, according to prosecutors.

Nine former Maxim employees, including three former regional managers, have been convicted to date on fraud charges related to the case, according the U.S. attorney's office. More prosecutions may be in the pipeline, Childers told reporters.

Maxim released a statement on Monday stating that the settlement was reached in large part because of reforms and remedial actions instituted at the company over the past two years. The company says it fired senior executives responsible for misconduct and established a new corporate officer charged with maintaining compliance controls.

Childers agreed with that assessment on Monday, telling reporters, "Maxim has demonstrated a commitment to reform."

Maxim said in Monday's statement that its conduct "did not adversely affect patient health or patient care." While the government agreed with that assessment in its complaint against the company, Childers told reporters, "Individuals facing monthly caps were facing situations in which they were unable to get their benefits."

"There has been an uptick in fraud cases that we've been able to investigate," said Special Agent O'Donnell. He estimated that between 3% and 10% of health care costs in federal programs are lost to fraud.

"Some of our best cases come from whistleblowers and beneficiaries... It is critical that beneficiaries report anything that looks suspicious; some of our best cases start with that phone call," he said.

The Justice Department has stepped up its pursuit of fraud cases under the Obama administration, according to West. "Since January 2009, more than $8 billion have been recovered in lost funds -- a record," he said.

 
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