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Massachusetts Attorney General and Hamilton Wingo Obtain a $25 Million Settlement in Medicaid Fraud Case Against Private Equity

The Office of the Attorney General in Massachusetts reports that this is the nation’s largest publicly disclosed government healthcare fraud settlement that involves a private equity oversight of health care providers. It is also the largest amount a private equity company has consented to pay to resolve fraud allegations involving healthcare portfolio companies and stands as the biggest Massachusetts-only Medicaid Fraud settlement.

Hamilton Wingo Partners Chris Hamilton and Ray Khirallah worked alongside attorneys from the Massachusetts Attorney General’s Office, Medicaid Fraud Division, and Waters & Kraus Partners Caitlyn Silhan and Charles Siegel to secure a $25 million settlement in a federal False Claims Act case. This case against a private equity firm, HIG Capital, and former South Bay Mental Health Center, Inc., executives ended in the largest settlement of its kind, producing fraudulent claims submitted to the state’s Medicaid program, MassHealth. The institution received over $125 million from 2009 to 2017 from MassHealth for the claims submitted to Medicaid.

«It’s vital that people who need mental health services receive treatment from qualified individuals,» says Massachusetts Attorney General Maura Healey. «We took action against these defendants for leaving thousands of MassHealth patients with unlicensed and unsupervised care, while MassHealth paid millions of dollars for fraudulent services. We will go after bad actors who jeopardize people’s health and well-being to make a profit.»

The Office of the Attorney General in Massachusetts reports that this is the nation’s largest publicly disclosed government healthcare fraud settlement that involves a private equity oversight of health care providers. It is also the largest amount a private equity company has consented to pay to resolve fraud allegations involving healthcare portfolio companies and stands as the biggest Massachusetts-only Medicaid Fraud settlement.

In May of 2021, the legal team obtained a favorable ruling from Judge Patti Saris in the U.S. District Court for the District of Massachusetts, the first of its kind summary judgment victory against a private equity firm in a False Claims Act case, holding that a private equity defendant can be liable for causing the submission of false claims under the FCA and MFCA.

«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,» said AG Healey.

On October 6th, HIG Capital, Peter Scanlon, and Kevin Sheehan agreed to pay a collective sum of $25 million to settle the whistleblower’s and the Commonwealth’s claims. Of this amount, HIG will pay $19.95 million, and Scanlon and Sheheen will pay $5.05 million. South Bay Mental Health Center, Inc. settled in 2018 for its part in the suit, agreeing to a sum of $4 million, and entered into a five-year compliance program to ensure full compliance with MassHealth regulations.

«This historic victory is much larger than just this case,» said Chris Hamilton. «This is a victory for the American taxpayers and every citizen who cares about public health. I hope this serves as a strong warning to all private equity firms who treat our Medicaid system as a private piggy bank rather than a public trust.»

ABOUT HAMILTON WINGO, LLP

Hamilton Wingo, LLP, is a nationally recognized plaintiff’s trial firm based in Dallas, Texas. Our trial lawyers specialize in representing people and companies in high-stakes complex litigation. Our clients are more than cases; we strive to provide top-rated customer service and the best experience for our clients. We have obtained hundreds of millions of dollars in verdicts and settlements across the country.