- Associated Press - Monday, February 8, 2016

ALBUQUERQUE, N.M. (AP) - Ten nonprofits that had provided behavioral health services to needy New Mexicans were cleared Monday of fraud allegations as part of an investigation by the attorney general’s office, but state officials maintain there was still public money that was misspent.

Some regulatory violations were uncovered as part of the investigation, but Attorney General Hector Balderas told lawmakers in a letter that those instances did not appear to reflect a deliberate or intentional pattern of fraud.

Balderas said the results of the investigations were being forwarded to the state Human Services Department for possible administrative action.

The department will continue trying to recoup misspent and overbilled Medicaid dollars from the providers, Human Services spokesman Kyler Nerison said.

“The undeniable facts are that a significant amount of public funding was misspent, and that shortchanged those in need in New Mexico,” Nerison said, suggesting that some of the Medicaid funds were spent on private planes and luxury travel.

The department said it has recovered more than $4 million to date.

Balderas’ office is reviewing two remaining providers. His office previously found overpayment issues but no fraud with three other providers.

An initial audit in 2013 raised questions about fraud and abuse, alleging $36 million in state Medicaid funding was mishandled by the providers. That prompted Republican Gov. Susana Martinez’s administration to freeze Medicaid payments to 15 providers while the attorney general’s office launched its inquiry.

The Human Services Department eventually replaced the nonprofits with companies from Arizona, despite protests that the due-process rights of the nonprofit providers were violated when the state froze payments without hearings.

Many of the nonprofits have filed lawsuits against the department denying the allegations and challenging the lack of hearings.

The two remaining investigations involve the nonprofits TeamBuilders and Pathways.

The investigations that have been completed include Border Area Mental Health Services, Youth Development Inc., Hogares, Southwest Counseling Center and Presbyterian Medical Services.

After taking office in 2015, Balderas requested an additional $1.8 million to speed up the investigation after previous attorney general Gary King had warned it could take years to complete the inquiries.

The behavioral health care shake-up led to calls for changes in the way New Mexico handles claims of fraud and overbilling. However, legislation failed last year that would have established procedures for the Human Services Department to follow when determining whether an allegation is credible.

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