[co-author: Stephanie Kozol]*
On February 4, a Vermont Superior Court judge entered a $2,733,989.47 judgment against Phoenix Counseling & Wellness, PLC (Phoenix), and the company’s owner for alleged violations of the Vermont False Claims Act (VFCA). Vermont Attorney General (AG) Charity Clark and her office’s Medicaid Fraud and Residential Abuse Unit (MFRAU) received complaints regarding the quality of care and maintenance of patient treatment records by Phoenix.
In Vermont, the VFCA requires any Medicaid service provider to immediately and reliably document the services provided to patients that require Medicaid reimbursement. Service providers must give access to patients and auditors upon request. A medical provider’s cooperation with an investigation into an alleged violation of the VFCA is incentivized by avoidance of enhanced liability in the event that the target of the investigation opposes regulatory oversight.
The AG’s office alleged, and ultimately proved as a matter of law, that Phoenix submitted 164 false claims resulting in $148,948.49 in fraudulent payments by Medicaid between January 2019 and September 2022. Judge Samuel Hoar, Jr. issued a judgment finding Phoenix liable for violations of the VFCA based on (1) the company’s failure to keep reliable, contemporaneous, and accessible clinical patient records in associations with such claims; and (2) their failure to produce clinical patient records for state review in association with such claims.
The damages are noteworthy. While Phoenix submitted only $148,948.49 in allegedly false claims to the government, the VFCA’s penalties resulted in a judgment many multiples higher than the damages alone. Due to Phoenix’s failure to cooperate with the investigation, the judge tacked on a mandatory inflation-adjusted civil penalty of $13,946 for each of the 164 claims, subtotaling $2,287,144.00. The judge also awarded the state an unmitigated award of three times the total amount of damages caused, subtotaling $446,845.47 and bringing the total amount of damages to $2,733,989.47.
Why It Matters
This judgment emphasizes the importance of strategic engagement with state AGs during an investigation. A failure to engage can only lead to more litigation, and more exposure. Here, despite only submitting $150,000 worth of false claims, this business found itself liable for more than 18 times that amount.
*Senior Government Relations Manager
