Maxim Healthcare pays $150 million in civil/criminal settlement of fraudulent billing allegations; patient to receive $15.4 million

by Ben Vernia | September 12th, 2011

On September 12, the Department of Justice announced that Columbia, Maryland-based Maxim Healthcare Services, Inc., had agreed to pay a combined $150 million, enter into a deferred prosecution agreement, and accept a corporate integrity agreement and corporate monitor to settle claims that it falsely billed $61 million of home healthcare claims.

According to DOJ’s press release:

Maxim Healthcare Services Inc., one of the nation’s leading providers of home healthcare services, has entered into a settlement to resolve criminal and civil charges relating to a nationwide scheme to defraud Medicaid programs and the Veterans Affairs program of more than $61 million.

Today’s announcement was made by Tony West, Assistant Attorney General of the Civil Division of the Department of Justice; J. Gilmore Childers, Acting U.S. Attorney for the District of New Jersey; Tom ODonnell, Special Agent in Charge of the Health and Human Services Office of Inspector General (HHS-OIG) region covering New Jersey; Michael B. Ward, Special Agent in Charge of the FBI’s Newark, N.J., Field Office; and Jeffrey Hughes, Special Agent in Charge of the U.S. Department of Veterans Affairs, Office of the Inspector General (VA OIG), Northeast Field Office.

Maxim was charged today in a criminal complaint with conspiracy to commit health care fraud, and has entered into a deferred prosecution agreement (DPA) with the Department of Justice. The agreement will allow Maxim to avoid a health care fraud conviction on the charges if it complies with the DPA’s requirements. As required by the DPA, which will expire in 24 months if the company meets all of its reform and compliance requirements, Maxim has agreed to pay a criminal penalty of $20 million and to pay approximately $130 million in civil settlements in the matter, including to federal False Claims Act claims.

To date, nine individuals – eight former Maxim employees, including three senior managers and the parent of a former Maxim patient – have pleaded guilty to felony charges arising out of the submission of fraudulent billings to government health care programs, the creation of fraudulent documentation associated with government program billings, or false statements to government health care program officials regarding Maxim’s activities.

The criminal complaint accuses Maxim, a privately-held company based in Columbia, Md., with hundreds of offices throughout the United States, of submitting more than $61 million in fraudulent billings to government health care programs for services not rendered or otherwise not reimbursable. The investigation revealed that the submission of false bills to government health care programs was a common practice at Maxim from 2003 through 2009. During that time period, Maxim received more than $2 billion in reimbursements from government health care programs in 43 states based on billings submitted by Maxim.

The government and states paid $15.4 million to the whistleblower who filed the qui tam suit that led to the investigation (the varying whistleblower provisions in state law makes it impossible to calculate the precise share the whistleblower received). In his prepared remarks, Civil Division Assistant Attorney General Tony West said of the whistleblower:

It’s also unacceptable because this type of fraud uses patients as pawns in a game of corporate greed that puts cash over care, running up the bills on the very people our public health care programs are supposed to benefit – people like Richard West. Richard was one of Maxim’s patients, and when he one day received a notice that said he was in danger of reaching the limits of his health care coverage because of all the services Maxim had supposedly provided to him, Richard was surprised because he hadn’t received many of the services he was being billed for.

Well, Richard put two and two together and realized Maxim was overbilling. And so he filed a whistleblower lawsuit under the false claims act, and it’s that action that is being resolved today.

For Richard West and others who have caps on the amount of government services they may receive, overbilling schemes like Maxim’s can cause real harm and leave them without the health care they need and deserve. Today’s settlement helps right that wrong.

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