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TRENTON
-- Maxim Healthcare Services, Inc., one
of the nation’s largest health care
staffing agencies, has agreed to a $150
million multi-jurisdictional settlement
to resolve allegations that it defrauded
the Medicaid and Veterans Affairs health
care benefits programs, Attorney General
Paula T. Dow announced today, along with
Attorneys General from 40 other states,
and the U.S. Attorney’s Office for
the District of New Jersey.
Maxim, a privately-held company based in
Columbia, Maryland, has over 300 offices
in more than 40 states, including New Jersey.
The company provides home health care and
medical staffing, among other services,
to tens of thousands of patients through
approximately 60,000 internal and external
employees.
The settlement announced today is the culmination
of a more than five-year investigation by
state and federal authorities into allegations
that Maxim: (1) submitted false claims to
government health care benefits programs
for services to patients that were not provided;
(2) submitted government health care benefits
program claims that were improperly documented,
and therefore not reimbursable; and (3)
operated health care staffing offices that
were not licensed under applicable state
laws and regulations.
According to the State of New Jersey settlement
agreement with Maxim, the company’s
alleged activity extended from October 1,
1998 through May 31, 2009. The agreement
also contends that Maxim operated 13 unlicensed
facilities in five states, including New
Jersey locations in Atlantic and Mercer
Counties.
“False
billing to government health care programs
has become a blight on our state,”
said Attorney General Dow.
“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,”
Dow said. “Failure to do so will not
be tolerated.”
Executive
Assistant Attorney General Marc-Philip Ferzan
added, “Particularly in strained economic
times, when government budgets are already
overburdened, we have answered the call
to be even more vigilant in working with
our state and federal partners to combat
Medicaid fraud and abuse.”
The
Maxim investigation was initiated following
a complaint by a Medicaid patient who lived
in Ocean County, New Jersey.
In
2003-04, the then 55 year-old patient received
home nursing services staffed through a
Maxim office located in Ocean County. The
patient maintained detailed records of the
nature and amount of health care services
provided to him by Maxim. When Medicaid
informed him that the company had claimed,
and submitted invoices for, services beyond
what he was eligible for under his monthly
Medicaid benefits allotment, the patient
challenged the veracity of Maxim’s
invoices; and subsequently initiated a qui
tam lawsuit as a relator on behalf of the
federal and state governments. According
to the patient’s records, during a
15-month period between 2003 and 2004, Maxim
claimed more than 700 hours of services
that were not provided.
The
multi-state investigation spearheaded by
the New Jersey Attorney General’s
Office, through its Medicaid Fraud Control
Unit within the Office of the Insurance
Fraud Prosecutor (“OIFP”), was
coordinated with the U.S. Attorney’s
Office, as well as the U.S. Department of
Justice, FBI, U.S. Department of Health
& Human Services and U.S. Department
of Veterans Affairs.
As the investigation expanded, the New Jersey
Attorney General’s Office led the
team of states, along with Virginia and
Massachusetts, which eventually included
Attorneys General from 41 states and resulted
in 41 separate settlement agreements as
part of this resolution with Maxim. The
“global” resolution with Maxim
also includes a deferred criminal prosecution
agreement with the U.S. Attorney’s
Office; a federal civil settlement agreement
with the U.S. Attorney’s Office and
Civil Division of the U.S. Department of
Justice on behalf of the U.S. Departments
of Health & Human Services and Veterans
Affairs; and a corporate integrity agreement
with the U.S. Department of Health &
Human Services.
The
total amount of the state and federal civil
settlements is $130 million, of which approximately
$121.5 million is allocated to the Medicaid
program, and approximately $8.5 million
to the Veterans’ Affairs program.
New Jersey’s share of the more than
$55 million in recoveries for the states
is approximately $2.7 million. It marks
one of the first healthcare cases employing
New Jersey’s False Claims Act statute.
Notably, under the terms of the settlement
agreement negotiated on behalf of New Jersey,
Maxim is prohibited from paying its shareholders
any dividends, distributions, or other payments
until it has made payment in full, including
interest, to the State.
Pursuant to the deferred prosecution agreement,
which is referenced in the New Jersey settlement
agreement, the U.S. Attorney for the District
of New Jersey will file a criminal complaint
in federal district court charging that,
from 2003 through 2009, Maxim conspired
to violate the federal Health Care Fraud
statute, contrary to Title 18, United States
Code, Section 1347, and in violation of
Title 18, United States Code, Section 1349.
Neither the state nor the federal government’s
allegations claim that Maxim’s conduct
adversely affected patient health or patient
care.
The deferred prosecution agreement covers
a period of two years and requires Maxim
to satisfy certain conditions to ensure
its compliance with state and federal laws.
Under terms of the deferred prosecution
agreement, Maxim will pay a criminal fine
of $20 million. The corporate integrity
agreement, which will be administered by
the U.S. Department of Health & Human
Services’ Office of the Inspector
General, extends for at least five years.
Among other things, it requires that Maxim’s
board of directors review and certify the
effectiveness of Maxim’s compliance
program on an annual basis.
The corporate integrity agreement also requires
that Maxim allow an independent corporate
monitor access to many of its activities
so that the monitor can determine Maxim’s
compliance with additional required corporate
reforms. Peter E. Keith, an attorney from
the Baltimore law firm of Gallagher, Evelius
& Jones, LLP, has been selected as the
corporate monitor. A material breach of
the deferred prosecution agreement could
result in prosecution of Maxim and/or certain
individuals, as well as Maxim’s exclusion
from certain health care programs, including
Medicaid.
In considering settlement with Maxim, the
State factored in the company’s cooperation
during the investigation, and its substantial
restructuring efforts over the recent years.
For example, in 2009, Maxim undertook a
significant reorganization, which included
the appointment of a new chief executive
officer, Brad Bennett.
Under
CEO Bennett’s leadership, Maxim added
new infrastructure and systems to support
compliance and enhance patient care, and
restructured its compensation program to
recognize employees for excellence in a
variety of areas, including clinical outcomes
and compliance.
Maxim also added several new senior leadership
positions, including a chief medical officer,
a chief quality officer, a chief compliance
officer, a chief culture officer, a vice-president
of human resources, and a new general counsel.
In addition, Maxim introduced an expanded,
company-wide compliance initiative that
ensures employees have access to enhanced
expertise, assessment, monitoring and training
programs.
In response to the multi-jurisdictional
resolution, Maxim CEO Bennett said, “While
we regret the circumstances that led to
this settlement, we have taken this opportunity
to review our operations closely and strengthen
our infrastructure, including our systems,
policies and procedures. This marks the
beginning of a new chapter for our company.
Maxim Healthcare remains strong and steadfast
in its commitment to providing high quality
care to the patients we serve.”
The
Maxim resolution was handled on behalf of
the State of New Jersey by Executive Assistant
Attorney General Ferzan, who previously
worked on the case as a federal prosecutor
at the U.S. Attorney’s Office for
the District of New Jersey; and Assistant
Attorney General John Krayniak, who led
the Medicaid Fraud Control Unit team within
OIFP, which is under the direction of Acting
Insurance Fraud Prosecutor Ronald Chillemi.
The State would also like to thank Assistant
U.S. Attorneys Jacob Elberg and Alex Kriegsman,
who handled the matter on behalf of the
U.S. Attorney’s Office, as well as
former Assistant U.S. Attorneys Grace Park,
Kevin O’Dowd, and Peter Katz, who
were part of the government team. Thanks
are also extended to the case agents and
counsel at the FBI, the U.S. Department
of Health & Human Services - Office
of Inspector General, the U.S. Department
of Veterans Affairs - Office of Inspector
General, and the U.S. Department of Justice.
Attorneys
for Maxim Healthcare Services, Inc.:
- Laura
Laemmle-Weidenfeld, Esquire - Patton Boggs
LLP
- Robert
D. Luskin, Esquire - Patton Boggs LLP
Attorneys
for Qui Tam Relator
- Robin
Page West, Esquire - Cohan, West &
Karpook, P.C.
- Herbert
T. Posner, Esquire
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