NEWARK, N.J. — A Maryland-based health care company accused of defrauding Medicaid and other federal programs will pay $150 million in a settlement announced Monday.
Maxim Healthcare Systems is a health care staffing agency based in Columbia, Md., with offices in more than 40 states. Under the agreement with federal prosecutors announced Monday, Maxim will pay a criminal penalty of $20 million and civil penalties totaling approximately $130 million to Medicaid programs and the Veterans Affairs program.
About $70 million will go to the federal government and $60 million will go to 42 states where false claims were made. Tony West, assistant attorney general of the Justice Department's civil division, said it was the largest civil settlement in a home health care fraud case.
"Health care fraud costs taxpayers money; in this case, a lot of money," Mr. West said. "This is not acceptable because each of us ends up footing the bill in higher health care costs."
Authorities had investigated the company for the past five years and charged it with conspiracy to commit health care fraud for submitting claims for services that were never provided and operating offices that weren't properly licensed.
"We take full responsibility for these events ... 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 who depend on us each and every day," Maxim CEO Brad Bennett said in a statement.
Nine Maxim employees — including three regional account managers, a supervising nurse and a home health aide — have pleaded guilty to either health care fraud or making false statements since December 2009 and face maximum prison sentences of between five and 10 years.
Though none of the company's top executives have been charged, J. Gilmore Childers, acting U.S. attorney for New Jersey, said the investigation was ongoing. Mr. Childers said the regional managers who pleaded guilty were responsible for hundreds of employees and millions of dollars in revenue each year.
The investigation began after a New Jersey man notified authorities that Maxim had submitted invoices for services he never received.
Reached at his home Monday, 63-year-old Richard West, who was diagnosed with muscular dystrophy in 1981, directed inquiries to a website that describes his involvement in the case.
According to Mr. West's Web account, he learned that his Medicaid home health care services would be reduced or suspended because he had already exceeded his monthly limit. When he consulted a log he had kept of his home care, he realized the accounting was incorrect. He eventually contacted authorities, who concluded that Maxim had billed Medicaid for 735 hours of service that were never provided.
"From my wheelchair on a ventilator and oxygen, I have spent the last seven years in this fight," Mr. West writes on the website. "Sometimes the good guys win."
Under terms of the settlement, Mr. West will receive more than $15 million. Maxim, which Mr. Childers said employs about 88,000 people, will continue to operate under the oversight of an independent monitor for two years.
According to the criminal complaint, Maxim submitted false bills from 2003 to 2009, a period during which it received more than $2 billion in reimbursements from government health programs.