A Worcester home health care agency that is the target of a fraud investigation says it laid off most of its workers, disrupting services for hundreds of patients, after the state cut off payments.
The Massachusetts attorney general’s office is investigating Compassionate Homecare Inc. for allegedly filing false claims and defrauding the state’s Medicaid program, known as MassHealth, the Globe reported earlier this month. In December, MassHealth officials took the unusual step of suspending payments to the company because of the allegations.
The state has withheld more than $5 million from Compassionate Homecare, without detailing the allegations against the company or charging its executives with any wrongdoing, according to the company.
State officials said they are required by law to stop sending taxpayer dollars to a company facing “credible allegations” of fraud.
Compassionate Homecare is one of a dozen home health companies the Executive Office of Health and Human Services referred to the attorney general after reviewing internal data and fielding consumer complaints that pointed to possible fraud. Officials did not name the agencies, but Compassionate Homecare disclosed its situation in a lawsuit filed against the state in January.
In an interview last week, Francis Kimaru, the company’s owner, said he paid his more than 800 employees with savings after state reimbursements were frozen. Kimaru said he is now out of funds, and the company’s nurses, home health aides, and other workers are losing their jobs — temporarily, at least. “I’ve been paying out of my own pocket,” Kimaru said. “Now I’m done; I don’t have anything left.”
Compassionate Homecare is responsible for providing services to more than 700 patients, Kimaru said. It is now scrambling to transfer patients to other home health agencies.
Kimaru said he will maintain a skeleton staff and a patient roster as he awaits results of the attorney general’s investigation and pursues his own lawsuit. He said he opened his books to the state but can’t properly defend himself against the allegations if he doesn’t know what they are. “They didn’t elaborate on what is ‘false claims,’ ” Kimaru said. “They wouldn’t answer our questions.”
In court documents, the attorney general’s office said MassHealth is “not required to provide (and indeed is not privy to) specific details regarding the investigation” because doing so could compromise the investigation.
Compassionate Homecare is one of 195 agencies that contract with the state to provide nursing care, physical therapy, and other home health services to low-income individuals on MassHealth. The MassHealth program accounts for almost all of Compassionate Homecare’s business. The company, launched five years ago, collected $29 million in revenue last year, Kimaru said.
Court documents reveal that since July 2013, the company has been under investigation by the attorney general’s Medicaid Fraud Division. Law enforcement officials asked MassHealth not to suspend payments to the company at the time because doing so could have compromised the investigation.
But two years later, the attorney general’s office said there was no longer good cause not to suspend payments. MassHealth notified the company that it would stop payments while the investigation continues. Officials have not said how long they will suspend payments. Attorney General Maura Healey’s office declined to comment because the investigation is ongoing.
Home health services are a big and growing piece of MassHealth’s budget. The taxpayer-funded program is on track to spend $755 million on home health services in the fiscal year ending June 30, an increase of $170 million from the previous year.
As they attempt to rein in spending on MassHealth — the single biggest chunk of the state budget — officials say they are cracking down on home health agencies. They are requiring prior approval for services, conducting audits, and have temporarily stopped doing business with new agencies.
Since 2012, they have asked the attorney general to investigate 12 home health agencies for possible fraud; 10 were referred to investigators in the past 18 months.
“Where we find evidence of risks to members’ health and safety or the integrity of the program, we intend to pursue sanctions and payment recoupments to the full extent of our regulatory authority,” said Michelle Hillman, a spokeswoman for the Executive Office of Health and Human Services, which oversees MassHealth.
Compassionate Homecare is the only home health agency that MassHealth has stopped paying because of allegations of fraud.
Though the payments stopped two months ago, the company did not take steps to transfer patients until early February, after a Suffolk Superior Court judge on Feb. 1 denied its request to have the payments reinstated. Kimaru said he notified patients and employees about the situation on Feb. 4. He said he has not paid employees since that week.
Some employees, Kimaru said, are willing to volunteer to help the company stay afloat.
Kimaru did not notify state officials when he began laying off workers and moving patients to other agencies — a process that could take months. Contacted by the Globe, state officials said they were “concerned with what we are hearing” and were working with the Home Care Alliance of Massachusetts, which represents home health agencies, to help transfer Compassionate Homecare’s patients to new providers.
Kimaru said the company will continue fighting the state’s payment suspension in court. He refuses to give up his Medicaid contract.
“For me to withdraw from being a Medicaid [provider],” he said, “that means I’m guilty of something I don’t know.”