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Maxim Settles With U.S. for $150 Million Over Fraud Probe

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Sept. 12 (Bloomberg) -- Maxim Healthcare Services Inc., which provides in-home health and nursing services, will pay $150 million to resolve criminal and civil probes of fraudulently overbilling federal and state governments.

The U.S. Justice Department filed a criminal conspiracy charge in federal court in New Jersey against Maxim, and agreed to defer prosecution for two years. Nine people, including three regional account managers, have pleaded guilty since 2009 in federal court in Trenton, New Jersey.

“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,” said Tony West, assistant attorney general of the Justice Department’s civil division at a news conference in Newark, New Jersey.

Maxim, based in Columbia, Maryland, 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 U.S. states. The civil recovery is the largest ever in a home health care fraud, West said. The False Claims Act allows private 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 and we are pleased to reach a settlement that will allow us to move forward with the important work of caring for our patients and clients,” said Brad Bennett, chief executive officer of Maxim. Bennett was appointed in October 2009.

‘Emphasized Sales Goals’

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, as reflected in certain aspects of its culture, training, incentive compensation, and allocation of personnel resources,” Maxim admitted in court documents.

The criminal investigation is ongoing 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.

Sweeping Changes

The company, which has 88,000 employees, has made sweeping changes to its top management since May 2009 and has cooperated with the probe, said Childers. 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 probe began after a whistleblower lawsuit filed by New Jersey resident Richard W. West, who will collect a $15.4 million award. West, a 63-year-old resident of Tuckerton, New Jersey, was diagnosed with muscular dystrophy in 1981. Over 15 months in 2003 and 2004, Maxim claimed more than 700 hours of services not provided, according to Dow.

West said in an interview that he hired a lawyer from Baltimore, Robin Page West of Cohan, West & Karpook, to help him. Neither Richard West, Robin West or Tony West of the Justice Department are related.

‘Finally Over’

“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 outlined it at a press 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.”

Nine Pleaded

The nine who pleaded guilty included three who worked as regional accounts manager: Gregory Munzel, 35, of Charleston, South Carolina; Bryan Lee Shipman, 38, of Athens, Georgia; and Matthew Skaggs, 39, who worked in Texas, according to the Justice Department and court records.

Others who pleaded guilty are Donna Ocansey, 49, of Medford, New Jersey, a director of clinical services; Marion Morton, 45, of North Charleston, South Carolina, a home health aide; Andrew Sabbaghzadeh, 29, of Clay, New York, an account manager; Jason Bouche, 27, of Paradise Valley, Arizona, a recruiter; and Mary Shelly Janvier-Pierre, 42, of Lake Worth, Florida, a licensed practical nurse, according to the Justice Department and court records.

The mother of a former pediatric patient, Sandy Cave, 39, of West Palm Beach, Florida, also pleaded guilty, according to the Justice Department and court records. Skaggs and Morton already have been sentenced to probationary terms.

The case is United States v. Maxim Healthcare Services, 11-mj-6107, U.S. District Court, District of New Jersey (Newark).

To contact the reporter on this story: David Voreacos in Newark, New Jersey, at

To contact the editor responsible for this story: Michael Hytha at

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