(Bloomberg) -- Private-equity firm HIG Capital agreed to pay $20 million to resolve Medicaid fraud charges related to a behavioral-health provider that it owned.
The agreement comes three years after Massachusetts Attorney General Maura Healey filed a civil fraud case alleging that HIG disregarded an employee’s complaint that Community Intervention Services was using unsupervised, unlicensed therapists to care for patients. Two former heads of CIS agreed to pay a total of $5 million.
The defendants, accused of causing fraudulent claims to be submitted to the state’s Medicaid program, didn’t admit liability or wrongdoing. In earlier court filings, the companies denied that false claims were filed, that the whistle-blower alerted them or that care suffered.
The settlement with Massachusetts and the U.S. Department of Justice is one of the largest by a private-equity firm in a false-claims case, in which a corporate whistle-blower brings a fraud allegation to the federal government.
Read More: Private Equity Loses Its Shield as U.S. Cracks Down on Fraud
Authorities are increasingly seeking to make private-equity firms pay for the misdeeds of companies they own.
“We want to be really clear they need to play by the rules and they will be held accountable if their business model jeopardizes the well-being of patients in order to make a profit,” Healey, whose office provided a copy of the settlement agreement, said in a phone interview.
The whistle-blower, Christine Martino-Fleming, a former CIS training coordinator, is expected to receive $6.75 million as part of the settlement.
Community Intervention Services, which filed for bankruptcy protection in January, previously settled the case for $4 million.
©2021 Bloomberg L.P.