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Private equity firm HIG Capital settles fraud case for $20 million By Reuters


© Reuters.

Nate Raymond

BOSTON (Reuters), – HIG Capital, a private equity company, has paid nearly $20 million in settlements to settle claims that HIG Capital owned a mental healthcare firm which billed Massachusetts’ Medicaid program with services rendered by unqualified and licensed staff.

Maura Shealey, Massachusetts Attorney-General, said Thursday that the settlement reached with a private investment firm was the largest. Healthcare investments made by this company have come under increasing scrutiny.

HIG Capital will pay $19.95million, while Peter Scanlan (ex-executive) and Kevin Sheehan (ex-executives in the mental health industry), will each pay $5.05 million.

Their lawyers did not immediately comment on their statements and they didn’t admit to wrongdoing.

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This settlement was the result of an investigation into South Bay Community Services’ operation of several mental health clinics throughout Massachusetts, which was prompted in part by a whistleblower suit in Boston Federal Court.

Christine MartinoFleming (ex-South Bay employee) filed the suit under the False Claims Act.

HIG’s Mental Health Company Community Intervention Services acquired South Bay in 2012. The company filed for bankruptcy protection on January 1.

Healey, who joined the case in 2018, accused South Bay, of using unlicensed, unequal and unsupervised employees at its 17 facilities. This was in violation MassHealth’s Medicaid Program regulations.

However, South Bay billed MassHealth for mental health services as though they were provided by properly trained staff. The lawsuit claimed that South Bay also submitted false claims to pay.

The state claimed that South Bay was awarded $125.4 million by MassHealth between 2009 and 2017.

Healey sued South Bay and HIG in addition to Scanlan (South Bay’s founder, former owner) and Sheehan who was the chief executive of Community Intervention Service.

South Bay paid $4 Million to settle claims in 2018.

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