Firm settles probe in overbilling fraud

NEWARK, N.J. - Maxim Healthcare Services Inc., which provides in-home health and nursing services, will pay $150 million to resolve criminal and civil investigations of fraud in overbilling federal and state governments.

The U.S. Department of Justice, which filed a criminal-conspiracy charge in federal court here against Maxim, agreed to defer prosecution for two years. Since 2009, nine people, including three regional account managers, have pleaded guilty in federal court in Trenton.

Maxim has offices in Cherry Hill and in Bala Cynwyd, Exton, Lansdale, and Trevose, Pa.

"Fraudulent billing for services not rendered uses patients as pawns in a game of corporate greed that puts cash over care and wastes precious taxpayer dollars," Tony West, assistant attorney general of the Justice Department's civil division, said at a news conference.

Maxim, based in Columbia, Md., will pay a $20 million criminal fine and $130 million to resolve civil allegations under the U.S. False Claims Act and claims by 43 states. The civil recovery is the largest ever in a home-health-care fraud, West said. The False Claims Act allows citizens to sue on behalf of the government and share in any recovery.

"We take full responsibility for these events set forth in the deferred-prosecution agreement," said Brad Bennett, chief executive officer of Maxim. Bennett was appointed in October 2009.

As part of its deferred-prosecution agreement, Maxim admitted that between 2003 and 2009, it conspired to defraud government health programs of $61 million.

"Certain aspects of Maxim's operations emphasized sales goals at the expense of clinical and compliance responsibilities," Maxim said in court documents.

The criminal investigation is continuing, and "it's certainly a possibility" that others will be charged, J. Gilmore Childers, the first assistant U.S. attorney in New Jersey, said at the news conference. He said the regional account managers oversaw hundreds of employees and millions of dollars in revenue.

The company, which has 88,000 employees, has made sweeping changes to its top management since May 2009 and has cooperated with the investigation, Childers said. Maxim had revenue last year of more than $1 billion, said Executive Assistant U.S. Attorney Michael Martinez.

Maxim has signed a corporate-integrity agreement and will be overseen by a corporate monitor.

"Companies like Maxim, that provide health-care services to Medicaid patients, are expected to take necessary steps to prevent fraud and abuse by instituting strong compliance programs and maintaining effective internal controls," New Jersey Attorney General Paula Dow said in a statement. Under the agreement, New Jersey will collect about $2.7 million.

The investigation began after a whistle-blower lawsuit filed by New Jersey resident Richard W. West, who will collect a $15.4 million award. West, 63, of Tuckerton, was diagnosed in 1981 with muscular dystrophy. Over 15 months in 2003 and 2004, Maxim claimed more than 700 hours of services not provided, Dow said.

In an interview, West said he had hired a lawyer from Baltimore - Robin Page West of Cohan, West & Karpook - to help him. (Richard West, Robin West, and Tony West are not related.)

"I am pleased that it's finally over," Richard West said. "I tried to rectify this through a county social worker. She had no power. I tried to bring it to the state Medicaid waiver office. They did nothing. I called the Medicaid hotline for fraud, and they said, 'We'll look into it.' No one ever did anything. That's why I had to go out of state to find my lawyer."

Dow issued a news release detailing the settlement before federal officials had outlined it at a news conference. In response, Childers said in a statement: "The state played a limited administrative role in this case. It is troubling and disappointing that they would take credit for years of tireless work done by federal agents and prosecutors, particularly concerning an issue so important to the people of New Jersey."

Among the nine who pleaded guilty were three who worked as regional account managers: Gregory Munzel, 35, of Charleston, S.C.; Bryan Lee Shipman, 38, of Athens, Ga.; and Matthew Skaggs, 39, who worked in Texas, according to the Justice Department and court records.

Donna Ocansey, 49, of Medford, a director of clinical services, also pleaded guilty.