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New Jersey to collect $2.7 million

Maxim Healthcare Services Inc., one of the nation’s largest health care staffing agencies, has agreed to a $150 million settlement with 41 states, including New Jersey, to resolve allegations that it defrauded the Medicaid and Veterans Affairs health care benefits programs, state Attorney General Paula T. Dow announced Monday.

New Jersey’s share is $2.7 million.

Maxim, a privately-held company based in Columbia, Md., 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 thousands of patients through approximately 60,000 internal and external employees.

The settlement is the culmination of a more than five-year investigation by state and federal authorities into allegations that Maxim: submitted false claims to government health care benefits programs for services to patients that were not provided; submitted government health care benefits program claims that were improperly documented, and therefore not reimbursable, and operated health care staffing offices that were not licensed under applicable state laws and regulations.

According to New Jersey’s settlement with Maxim, the company’s alleged activity extended from Oct. 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,” Dow said. “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. Failure to do so will not be tolerated.”

The U.S. Attorney for New Jersey is preparing to file a criminal complaint in federal court charging that, from 2003 through 2009, Maxim conspired to violate the federal Health Care Fraud statute.

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.

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, was coordinated with the U.S. Attorney’s Office, as well as the U.S. Department of Justice, the FBI, the U.S. Department of Health & Human Services and the U.S. Department of Veterans Affairs.

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. The 41 states will share $55 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.

Neither the state nor the federal government’s allegations claim that Maxim’s conduct adversely affected patient health or patient care.

Under terms of the deferred prosecution agreement, Maxim will pay a criminal fine of $20 million.

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 its compliance with required corporate reforms.

In response to the multi-jurisdictional resolution, Maxim CEO Brad 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.”

—TOM HESTER SR., NEWJERSEYNEWSROOM.COM