The chief executive for Reston-based Maximus Inc. yesterday said the company is no longer offering the sort of contingency-based contracts for Medicaid consulting that arose during a criminal investigation into its work for the D.C. government.
“It became clear the project simply did not live up to the Maximus professional standards,” Chief Executive Officer Richard A. Montoni said during a conference call with analysts. “The project and its issues date back several years under the leadership of a former management team.”
Maximus this week agreed to pay $30.5 million to settle a long-running investigation into its work on a Medicaid consulting contract with the District’s foster care agency.
Under its contingency contract, Maximus pocketed 10 cents of every Medicaid dollar that it helped the city recoup, eventually netting the company more than $3 million for at least $30 million in Medicaid claims it prepared.
Mr. Montoni said Maximus voluntarily decided that it would no longer offer or pursue such contingency-based contracts while consulting on federal reimbursement projects. Instead, he said the company would pursue hourly or fixed-fee contracts.
According to the company’s settlement agreement, Maximus caused the D.C. government to submit 26,863 undocumented Medicaid claims to the federal government. No individual employees were charged criminally in the investigation.
The federal investigation stemmed from a False Claims Act lawsuit filed by a former Maximus division manager, Benjamin Turner, who was assigned to the D.C. project. Mr. Turner, who will receive nearly $5 million in the settlement, said the company created billing invoices to submit to Medicaid, even though records of service being provided did not always exist.
Maximus hired Mr. Turner in March 1999 to direct its human services division and assigned the health care consultant to its “revenue maximization” project for the foster care agency — which some employees dubbed Operation Lightning Rod, according to the former employee’s lawsuit.
Mr. Montoni yesterday said the settlement “clears the decks” and “addressed one of our largest sources of uncertainty facing the company.”
The settlement, announced Monday, came on the same day that the company said it also planned to explore “strategic alternatives,” including a possible sale.
Mr. Montoni said the timing of that announcement wasn’t tied to the decision to settle the criminal investigation.
“There was no one thing that triggered this,” he said.
In addition, Mr. Montoni said the company expects more contract work to help clients root out fraud, waste and abuse should “more than compensate” for any revenue loss triggered by the decision to stop offering contingency-based contracts.
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