A private equity firm and former executives of a Boston Mental Health Center have agreed to pay $25 million for allegedly causing fraudulent claims to be submitted to the Massachusetts Medicaid Program. The fraudulent claims are the result of mental healthcare services provided to patients by unlicensed, unqualified, and improperly supervised staff members at clinics located in Massachusetts.
According to an October 14, 2021, release by the Massachusetts Attorney General’s Office, the $25 million settlement is the largest publicly disclosed government healthcare fraud settlement in the nation involving private equity oversight of healthcare providers. Additionally, the settlement is the largest amount a private equity company itself has agreed to pay to resolve fraud allegations involving a healthcare portfolio company, and is the biggest Massachusetts-only Medicaid Fraud settlement.
In January 2018, the Attorney General’s (AG) Office intervened in a lawsuit that was initially filed by a whistleblower who was a former employee of the Boston Mental Health Center. The AG’s office alleged that the mental health clinics that were named in the complaint had significant gaps in licensing and supervision of therapists during a specific time period. The AG’s office found that the Center had a widespread pattern of employing unlicensed, unqualified, and unsupervised staff at its mental health facilities. In February 2018, the Center had agreed to pay $4 million for its role in the scheme and entered into a five-year compliance program overseen by an independent monitor to ensure that its clinics came into full compliance with MassHealth regulations.
An amended complaint filed by the AG’s Office and the whistleblower in 2019 stated the submission of these fraudulent claims to MassHealth for mental health services violated the Massachusetts False Claims Act. The $25 million settlement of October 2021 resolves allegations that the private equity firm and the Mental Health Center knew that they were causing fraudulent claims to be submitted to MassHealth by failing to adopt recommendations to bring the Center into compliance. In May 2021, the Court denied attempts of the private equity firm and the Center to dismiss these allegations at the summary judgement stage. Under the terms of the settlement, the Mental Health Center will pay $19.95 million, while the private equity firm will pay $5.05 million.
Compliance Perspective
Issue
It is extremely important that all members of the healthcare team are aware of what may be considered a false claim. Ensure that all staff are aware that these violations can occur whether they are intentional or unintentional. Failure to promptly report a suspected or known false claim can result in lawsuits, fines, and other sanctions. Additional information is available in the Med-Net Corporate Compliance and Ethics Manual, Chapter 1 Compliance and Ethics Program, CP 2.3 General Legal Duties and Antitrust Laws.
Discussion Points
- Review policies and procedures for preventing and reporting any suspected or known false claim violation. Update your policies and procedures as needed.
- Train all staff on the False Claims Act and what can be considered a false claim. Include information on how to report concerns and suspected violations, and that prompt reporting is mandatory. Document that the trainings occurred and place in each employee’s education file.
- Periodically audit staff understanding to ensure that they are aware of what should be done if they suspect a false claim has occurred or is about to occur, whether intentionally or unintentionally. Conduct audits of documentation and billing routinely to prevent and detect errors before they progress to a false claim.
FOR MORE INFORMATION ON THIS TOPIC VIEW: FRAUD MODULE 3 – MASTERING LEGAL IMPLICATIONS AND ANTITRUST LAWS.
