October 22, 2021

Private Equity Firm to Pay Almost $20 Million to Settle Allegations of Medicaid Fraud

Lori Kalani, Bernard Nash

Cozen O'Connor

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Cozen O'Connor

Massachusetts AG Maura Healey reached a settlement with private equity firms H.I.G. Growth Partners, LLC and H.I.G. Capital, LLC (collectively “HIG”), and two former executives of a mental health facility operator, South Bay Mental Health Center, Inc. (“SBMHC”), to resolve allegations that they caused fraudulent claims to be submitted to the state’s Medicaid program, known as MassHealth, in violation of federal and state false claims acts.
The amended complaint, filed by the AG’s office and a whistleblower, alleged that SBMHC had a widespread pattern of billing MassHealth for services provided by unlicensed, unqualified, and unsupervised personnel, even though MassHealth regulations require these services to be provided by qualified clinicians and counselors subject to certain licensure and supervision requirements. The amended complaint further alleged that defendants knew of SBMHC’s pattern of fraudulent claims and failed to adopt recommendations to bring SMBHC into compliance.
According to the AG’s office, under the terms of the settlement, HIG will pay $19.95 million, while the former SBMHC executives will pay another $5.05 million. In an earlier settlement in February 2018, SBMHC agreed to pay $4 million and to retain an independent monitor to oversee a five-year compliance program.

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