Health Care Organization Inflated Medicaid Reimbursements: U.S.

POUGHKEEPSIE, NY — A civil fraud lawsuit filed by the government against a Poughkeepsie-based nonprofit and its founder for inflating Medicaid reimbursements was settled.

Damian Williams, the United States Attorney for the Southern District of New York, announced Wednesday that a suit was filed against Maranatha Human Services Inc. and Henry Alfonso Coley for falsely claiming that millions of dollars expended to benefit for-profit ventures were reasonable and necessary.

Prosecutors said the complaint alleges that, with its board's approval, Maranatha funded profit-making companies operated by Coley, paid excessive salaries and consulting fees to his family members, often in exchange for little to no work, and paid for tens of thousands of dollars of Coley's personal expenses, including $34,000 for personal training sessions at a gym.

The government also said, from 2010 to 2019, Coley and Maranatha submitted to the state of New York cost reports that falsely claimed millions of dollars in these expenses as "allowable" costs, which fraudulently inflated Maranatha's Medicaid reimbursement rates, resulting in the nonprofit receiving millions of dollars in Medicaid funds to which it was not entitled.

Since 2010, prosecutors said Coley received more than $2 million from Maranatha in salary and benefits, which the nonprofit justified on its financial reports as "allowable cost."

At the same time the lawsuit was filed, the government approved a settlement with Coley, where he will pay $88,000 to the U.S. and admitted and accepted responsibility for wrongdoing.

Coley has also agreed to pay $132,000 to New York to resolve its claims, for a total recovery of $220,000.

Coley also agreed never to work for or accept payments from any entity that receives money from a federal health care program. He also entered into a voluntary exclusion agreement with the U.S. Department of Health and Human Services which prohibits him from participating in Medicaid and other federal health care programs for 15 years.

Williams said his office will continue to hold entities and their executives accountable when they abuse federal health care programs.

"These expenses were not related to providing care or assistance to the individuals with developmental disabilities Maranatha was meant to serve," he said.