PHOENIX — Two former executives at Hacienda Healthcare, the facility where an incapacitated patient was raped and impregnated by a former nurse in 2018, have been indicted and the company will pay Arizona more than $11 million.
Attorney General Mark Brnovich announced Wednesday that his office reached a civil settlement with Hacienda Healthcare Inc.
Hacienda’s former Chief Executive Officer William Timmons and Chief Financial Officer Joseph O’Malley were also recently indicted by a state grand jury in an alleged white-collar fraud scheme.
In a statement, Hacienda Healthcare CEO Perry Petrilli said the board of directors took immediate action to investigate and fix after members were made aware in 2019 that Hacienda "received improper overpayments from the State of Arizona."
Petrilli said current staff and leadership "cooperated fully" with the attorney general's office and "no one currently involved with Hacienda was aware of these alleged illegal actions, nor could anyone have been aware given the way these actions were recorded."
Timmons was charged with three counts of fraudulent schemes and artifices and one count of illegally conducting an enterprise. O’Malley was charged with one count of each.
The attorney general's office launched a criminal investigation into allegations of financial improprieties by former Hacienda executives in January 2019, the office said Wednesday.
The pair, according to the attorney general's office, "bilked Arizona taxpayers out of millions of dollars."
Hacienda Healthcare and the Arizona Department of Economic Security’s Division of Developmental Disabilities entered into a contract in 2013, in which Hacienda would be given $1,100 per day per patient.
If Hacienda received an overpayment, the company was supposed to reimburse the department, the attorney general's office said.
According to the indictment, from 2013 until Timmons resigned in 2019, Timmons and O’Malley allegedly intentionally misallocated state funds by manipulating costs to avoid repaying the state in favor of inflated salaries and bonuses.
While the contract was supposed to be for Hacienda Healthcare's Intermediate Care Facility only, Timmons and O’Malley allegedly used the money to pay for a large portion of costs at Hacienda's other facilities and did not reimburse the state.
The indictment also alleged that South Mountain Health Supply, which operated under the umbrella of Hacienda Healthcare, purchased medical supplies from third-party vendors from July 1, 2013 to June 2018, and then re-sold the supplies to Hacienda at a 12.5% markup.
According to the attorney general's office, Timmons allegedly directed the payment of the inflated prices, including a delivery fee, with public funds.
The indictment also alleged that between July 1, 2013 and January 23, 2019, Timmons ordered the fraudulent billing of health insurance companies for multiple uses of a Synagis vaccine.
Timmons allegedly told staff members not to discard Synagis vials after a single-use and instead to administer all remaining medication to patients.
Health insurance companies were still billed for the entire cost of a vial. The medication, according to the website, is "a therapy to help prevent serious lung disease caused by respiratory syncytial virus in children at high risk."
The Arizona Attorney General's Office also announced Wednesday that the company will pay the state more than $11,000,000 to resolve its criminal case.
The details of the settlement agreement, according to the attorney general's office, include:
- Hacienda Healthcare agrees to repay the Arizona Health Care Cost Containment System an overpayment of $10,895,648.25.
- Hacienda will pay $7 million by January 5, 2021, followed by monthly installments of $50,000.
- $7 million is currently in an escrow account
- Hacienda will also pay a $1 million fine to the attorney general's office revolving fund, which will be paid in monthly installments of $15,000.
- Arizona agrees not to take any civil, criminal, or administrative legal action against the entity Hacienda for the covered conduct unless there has been a breach in the settlement agreement.
By signing the settlement agreement, Hacienda Healthcare officials accepted responsibility for its conduct, but it does not exonerate any former officers in the ongoing criminal indictment.
This is a developing situation. Stay tuned to 12 News for the latest.
FROM 2019:
FIND MORE HACIENDA HEALTHCARE COVERAGE HERE: