Maxim Healthcare reaches $150 million fraud settlement

(Reuters) - Maxim Healthcare Services Inc, a home health-care services company, has agreed to pay $150 million to resolve allegations it defrauded U.S. government benefits programs.

The settlement, announced Monday by the Department of Justice and New Jersey state authorities, resolves criminal and civil charges that the privately held company defrauded Medicaid and Veterans Affairs healthcare programs.

Maxim, based in Columbia, Maryland, was accused of submitting false claims for services it did not provide or that were improperly documented. It was also accused of operating offices that were not properly licensed.

Maxim settled with the U.S. Department of Justice and 41 states. The company entered into a deferred prosecution agreement with the Justice Department under which it will pay a $20 million fine.

If Maxim meets the agreement's requirements, it will avoid charges. The government said it was willing to enter into the agreement with Maxim in part because of its cooperation and significant personnel changes it has made since 2009.

"We take full responsibility for these events set forth in the deferred prosecution agreement 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 Chief Executive Officer Brad Bennett said in a statement.

About $121.5 million of the settlement will be allocated to the Medicaid program, and approximately $8.5 million to the Veterans Affairs program.

According to a criminal complaint filed in connection with the agreement, Maxim submitted more than $61 million in fraudulent bills to Medicaid and the Veterans Affairs program.

"Maxim, including senior executives, defrauded a system providing needed services to turn money meant for patient care into corporate profits," said acting New Jersey U.S. Attorney J. Gilmore Childers in a statement.

The New Jersey U.S. Attorney's Office said that to date, nine people -- eight former Maxim employees, including three senior managers, and the parent of a former Maxim patient -- have pleaded guilty in connection with the fraud.

The three former senior managers are Gregory Munzel, Bryan Lee Shipman, and Matthew Skaggs.

Munzel pleaded guilty in 2009 to one count of making false statements relating to health-care fraud matters. He is set to be sentenced September 29.

Shipman pleaded guilty to one count of healthcare fraud last year. He is scheduled to be sentenced November 16.

Skaggs pleaded guilty to making false statements relating to health care fraud matters last year. He was sentenced on June 10, to three years' probation and ordered to pay a $4,000 fine.

The criminal case against the company is U.S. District Court, District of New Jersey, United States of America v. Maxim Healthcare Services Inc, 11-6107.

(Reporting by Jonathan Stempel and Andrew Longstreth; Editing by Lisa Von Ahn, Dave Zimmerman and Bernard Orr)