SETTLEMENT AGREEMENT
Exhibit
10.1
I.
PARTIES
This
Settlement Agreement (“Agreement”) is entered into among the United States of
America, acting through the United States Department of Justice and on behalf
of
the Office of Inspector General (“OIG-HHS”) of the Department of Health and
Human Services (“HHS”) (collectively the "United States”); relator Xxxxxxxx
Xxxxxx, and Maximus, Inc. (“Maximus”) (hereafter referred to as “the Parties”),
through their authorized representatives.
II.
PREAMBLE
As
a
preamble to this Agreement, the Parties agree to the following:
A. Maximus,
a Virginia corporation with headquarters in Reston, Virginia, is a government
services company, providing government program operations, consulting, and
information technology services primarily to state and local
governments.
B. In
March 1999, Maximus entered into a contract (“Contract”) with the District of
Columbia’s Child and Family Services Agency (“CFSA”) to assist the District of
Columbia in collecting revenue for Targeted Case Management Services (“TCM”)
provided by CFSA. In November 2002, as a result of a review conducted by
the
Centers for Medicaid and Medicare Services (“CMS”), a component of the United
States Department of Health and Human Services, of CFSA’s TCM claims, the
District of Columbia reduced its TCM claims by $12.15 million to adjust for
those claims it had previously
submitted for services that were either not performed or that lacked
documentation that they had been performed.
C. Xxxxxxxx
Xxxxxx (the “Relator”) is an individual resident of Rhode Island. On June 21,
2005, Relator filed a qui tam action in the United States District Court
for the
District of Columbia captioned United States of America ex rel. Xxxxxxxx
Xxxxxx and The Government of the District of Columbia ex rel. Xxxxxxxx Xxxxxx
v.
Maximus (hereinafter “the Civil Action”). From March 1999 through June
2002, Relator was a Director in the Human Services Division of Maximus and
was
assigned to work on the Contract that Maximus had with CFSA.
D. The
United States contends that Maximus submitted or caused to be submitted claims
for payment to the Medicaid Program (Medicaid), 42 U.S.C. §§ 1396-1 396v, for
TCM services for Abused or Neglected Children provided by CFSA pursuant to
the
District of Columbia’s State Plan for TCM reimbursements and pursuant to
Maximus’s Contract with CFSA. The United States further contends that it has
certain civil claims, as specified in Paragraphs 2 and 4, below, against
Maximus
for engaging in the following conduct (hereinafter referred to as the “Covered
Conduct”): during the period from July 1, 1999 to June 1, 2004, Maximus caused
to be submitted to CMS on behalf of CFSA and the District of Columbia’s Medical
Assistance Administration (MAA) false claims or statements for TCM services
for
Abused or Neglected Children that lacked documentation those services had
been
performed or that were not performed.
E. The
United States also contends that it has certain administrative claims, as
specified in Paragraph 4 below, against Maximus for engaging in the Covered
Conduct.
F. This
Agreement is neither an admission of liability (or admission of any matter
of
law or fact) by Maximus nor a concession by the United States that its claims
are not well founded.
G. To
avoid the delay, uncertainty, inconvenience, and expense of protracted
litigation of the above claims, the Parties reach a full and final settlement
pursuant to the Terms and Conditions below.
III.
TERMS AND CONDITIONS
1. The
Parties agree to the “Settlement Amount” of $42.65 million, as
follows:
a. The
Settlement Amount will be satisfied in part by the $12.15 million recovered
by
the United States through adjustments in payments made from CMS to CFSA as
referenced in Preamble Paragraph B above;
b. Maximus
agrees to pay $30.5 million (“Payment Amount”) no later than 2 business days
after the Effective Date of this Agreement; and
c. The
United States agrees to pay $4.93 million of the Payment Amount to
Relator.
d. Maximus
further agrees to pay Relator $460,000 for employment-related claims, expenses,
attorney’s fees and costs.
e. The
foregoing payments shall be made as follows:
(i). Maximus
agrees to pay the $30.5 million specified in paragraph 1.b above to the United
States by electronic funds transfer pursuant to written instructions to be
provided by Xxxxx Xxxxxx, Trial Attorney, United States Department of Justice.
Maximus agrees to make this electronic funds transfer no later than two business
days after the Effective Date of this Agreement.
(ii). Contingent
upon the United States receiving the Payment Amount specified in paragraph
1.b.
above from Maximus and as soon as feasible after receipt, the United States
agrees to pay the $4.93 million specified in paragraph 1.c. above to the
Relator
by electronic funds transfer.
(iii). Maximus
agrees to pay the $460,000 specified in paragraph 1.d. above to Relator by
electronic funds transfer to Allred, Bacon, Xxxxxxxx & Young within two
business days of the Effective Date of this Agreement.
2. Subject
to the exceptions in Paragraph 5 below, in consideration of the obligations
of
Maximus in this Agreement and conditioned upon Maximus’s full payment of the
Payment Amount, the United States (on behalf of itself, its officers, agents,
agencies, and departments) agrees to release Maximus, together with its current
and former parent corporations; each of its direct and indirect subsidiaries;
brother or sister corporations; divisions; current or former owners, officers,
directors, employees and affiliates; and the successors and assigns of any
of
them,
from
any
civil or administrative monetary claim the United States has or may have
for the
Covered Conduct under the False Claims Act, 31 U.S.C. §§ 3729-33; the Civil
Monetary Xxxxxxxxx Xxx, 00 X.X.X. § 0000x-0x; the Program Fraud Civil Xxxxxxxx
Xxx, 00 X.X.X. § § 0000-00; or the common law theories of payment by mistake,
unjust enrichment, and fraud, and any causes of action for which the Civil
Division of the United States Department of Justice has actual and present
authority to assert and compromise pursuant to 28 CFR Part 0, Subpart I,
Sec.
0.45(d) for the Covered Conduct. However, because none of the amounts paid
pursuant to this Agreement compensate the United States for civil or
administrative monetary claims the United States might have against CFSA
or MAA
for claims for TCM services for Abused and Neglected Children submitted to
CMS
by CFSA or MAA based on any of the Conduct delineated in i-vi below, such
claims
are excluded from the Covered Conduct, and nothing in this Agreement shall
limit
any right of the United States to pursue civil or administrative monetary
claims
against CFSA or MAA arising from claims for TCM services where:
i.
no individual case manager was assigned to the recipient;
ii. the
case manager had more than 30 clients;
iii. the
case manager did not have the education and experience required by the District
of Columbia’s Medicaid plan;
iv. case
plans were missing, inadequate or not re-assessed as required by the District
of
Columbia’s Medicaid plan;
v. no
documentation existed showing that the recipient was abused or neglected
or was
at risk of being abused or neglected; or
vi. costs
were included in TCM cost pools that were not related to providing TCM services
for Abused and Neglected Children or were costs that had also been reimbursed
under Title IV-E of the Social Security Act.
3.a. In
consideration of the obligations of Maximus in this Agreement, conditioned
upon
Maximus’s full payment of the Payment Amount, and upon Relator’s receipt of the
payment described in Paragraph 1.b and 1.c , Relator for himself and for
his
heirs, successors, attorneys, agents, and assigns, agrees to release Maximus
and
its subsidiaries, divisions, affiliates, partners, and present and former
shareholders, officers, directors, employees, and attorneys from any and
all
claims asserted and unasserted, known and unknown, based upon any transaction
or
incident occurring prior to the Effective Date of this agreement, including
but
not limited to from all claims that have been or could have been asserted
in the
Civil Action, from any civil monetary claim the United States has or may
have
under the False Claims Act, 31 U.S.C. §§ 3729-3733, from all claims for the
Covered Conduct that is pled in the Civil Action, and from any claim or demand
under 31 U.S.C. § 3730(d) for attorney’s fees, costs and expenses.
b. In
consideration of the obligations of Maximus in this Agreement, conditioned
upon
Maximus’s full payment of the Payment Amount, and upon Relator’s receipt of the
payment described in Paragraph 1.b and 1.c , Relator for himself and for
his
heirs,
successors, attorneys, agents, and assigns, agrees to release Maximus and
its
subsidiaries, divisions, affiliates, partners, and present and former
shareholders, officers, directors, employees, and attorneys from any and
all
claims asserted and unasserted, known and unknown, arising from the employment
of the Relator by Maximus or the termination of such employment including,
without limitation, claims under the Age Discrimination in Employment Act,
Title
VII of the 1964 Civil Rights Act, the Family Medical Leave Act, and all other
federal, state or local laws prohibiting employment discrimination, claims
for
breach of contract, wrongful discharge, personal injuries or torts, and all
claims under any federal, state or local laws governing employment
practices.
4. In
consideration of the obligations of Maximus in this Agreement and the Corporate
Integrity Agreement (CIA) entered into between OIG-HHS and Maximus, conditioned
upon Maximus’s full payment of the Payment Amount, the OIGHHS agrees to
release and refrain from instituting, directing, or maintaining any
administrative action seeking exclusion from Medicare, Medicaid, and other
Federal health care programs (as defined in 42 U.S.C. § 1320a-7b(f)) against
Maximus under 42 U.S.C.§ 1320a-7a (Civil Monetary Penalties Law) or 42 U.S.C. §
1320a-7(b)(7) (permissive exclusion for fraud, kickbacks, and other prohibited
activities) for the Covered Conduct, except as reserved in Paragraph 5, below,
and as reserved in this Paragraph. The OIG-HHS expressly reserves all rights
to
comply with any statutory obligations to exclude Maximus from Medicare,
Medicaid, and other Federal health care programs under 42 U.S.C. § 1320a-7(a)
(mandatory exclusion) based upon the Covered
Conduct. Nothing in this Paragraph precludes the OIG-HHS from taking action
against entities or persons, or for conduct and practices, for which claims
have
been reserved in Paragraph 5 below.
5. Notwithstanding
any term of this Agreement, specifically reserved and excluded from the scope
and terms of this Agreement as to any entity or person (including Maximus
and
Relator) are the following claims of the United States:
a. Any
civil, criminal, or administrative liability arising under Title 26, U.S.
Code
(Internal Revenue Code);
b. Any
criminal liability;
c. Except
as explicitly stated in this Agreement, any administrative liability, including
mandatory exclusion from Federal health care programs and any disallowance
action by CMS against the District of Columbia or its Medical Assistance
Administration;
d. Any
liability to the United States (or its agencies) for any conduct other than
the
Covered Conduct,
e. Any
liability based upon such obligations as are created by this
Agreement;
f. Any
liability for express or implied warranty claims or other claims for defective
or deficient products or services, including quality of goods and
services;
g. Any
liability for failure to deliver goods or services due; and
h. Any
civil or administrative liability of individuals (including current
or
former directors, officers, employees, agents, or shareholders of Maximus
who
receive written notification that they are the target of a criminal
investigation (as defined in the United States Attorneys’ Manual), who are
indicted, charged, or convicted, or who enter into a plea agreement, related
to
the Covered Conduct.
6. Relator
and his heirs, successors, attorneys, agents, and assigns agree not to object
to
this Agreement and agree and confirm that this Agreement is fair, adequate,
and
reasonable under all the circumstances, pursuant to 31 U.S.C. § 3730(c)(2)(B)
and, conditioned upon receipt of Relator’s share, Relator, for himself
individually, and for his heirs, successors, agents, and assigns, fully and
finally releases, waives, and forever discharges the United States, its
officers, agents, and employees, from any claims arising from or relating
to 31
U.S.C. § 3730; from any claims arising from the filing of the Civil Action; and
from any other claims for a share of the Settlement Amount; and in full
settlement of any claims Relator may have under this Agreement. This Agreement
does not resolve or in any manner affect any claims the United States has
or may
have against the Relator arising under Title 26, U.S. Code (Internal Revenue
Code), or any claims arising under this Agreement.
7. Maximus
waives and shall not assert any defenses Maximus may have to any criminal
prosecution or administrative action relating to the Covered Conduct that
may be
based in whole or in part on a contention that, under the Double Jeopardy
Clause
in the Fifth Amendment of the Constitution, or under the Excessive Fines
Clause
in the Eighth Amendment of the Constitution, this Agreement bars a remedy
sought
in such criminal prosecution or administrative action. Nothing in this
Paragraph
or any other provision of this Agreement constitutes an agreement by the
United
States concerning the characterization of the Settlement Amount for purposes
of
the Internal Revenue laws, Title 26 of the United States Code.
8. Maximus
fully and finally releases the United States, its agencies, employees, servants,
and agents from any claims (including attorney’s fees, costs, and expenses of
every kind and however denominated) that Maximus has asserted, could have
asserted, or may assert in the future against the United States, its agencies,
employees, servants, and agents, related to the Covered Conduct and the United
States' investigation and prosecution thereof.
9. The
Payment Amount shall not be decreased as a result of the denial of claims
for
payment by the District of Columbia, its Medical Assistance Administration
or
CMS, related to the Covered Conduct; and Maximus, on behalf of itself or
any
other entity, shall not resubmit to the District of Columbia or its Medical
Assistance Administration, or cause to be resubmitted to CMS any previously
denied claims related to the Covered Conduct, and shall not appeal any such
denials of claims.
10. Maximus
agrees to the following:
a. Unallowable
Costs Defined: that all costs (as defined in the Federal Acquisition
Regulation, 48 C.F.R. § 31.205-47; and in Titles XVIII and XIX of the Social
Security Act, 42 U.S.C. §§ 1395-1 395ggg and 1396-1 396v; and the regulations
and official program directives promulgated thereunder) incurred by or on
behalf
of Maximus, its present or former officers, directors, employees, shareholders,
and agents in connection with the following shall be unallowable costs on
government contracts
and under the Medicare Program, Medicaid Program, TRICARE Program, and Federal
Employees Health Benefits Program (FEHBP):
(1) the
matters covered by this Agreement and any related deferred prosecution
agreement;
(2) the
United States’ audit(s) and civil and any criminal investigation(s) of the
matters covered by this Agreement;
(3) Maximus’s
investigation, defense, and corrective actions undertaken in response to
the
United States’ audit(s) and civil and any criminal investigation(s) in
connection with the matters covered by this Agreement (including attorney’s
fees);
(4) the
negotiation and performance of this Agreement and any related deferred
prosecution agreement
(5) the
payment Maximus makes to the United States pursuant to this Agreement and
any
payments that Maximus may make to Relator, including costs and attorneys
fees;
and
(6) the
negotiation of, and obligations undertaken pursuant to the CIA to:
(i) retain
an independent review organization to perform annual reviews as described
in
Section III of the CIA; and
(ii) prepare
and submit reports to the OIG-HHS.
However,
nothing in this Paragraph 16.a.(6) that may apply to the obligations undertaken
pursuant to the CIA affects the status of costs that are not allowable based
on
any other authority applicable to Maximus.
(All
costs
described or set forth in this Paragraph 16.a. are hereafter “unallowable
costs.”)
b. Future
Treatment of Unallowable Costs: These unallowable costs shall be separately
determined and accounted for by Maximus, and Maximus shall not charge such
unallowable costs directly or indirectly to any contracts with the United
States
or any State or District of Columbia Medicaid program, or seek payment for
such
unallowable costs through any cost report, cost statement, information
statement, or payment request submitted by Maximus or any of its subsidiaries
or
affiliates to the Medicare, Medicaid, TRICARE, or FEHBP Programs.
c. Treatment
of Unallowable Costs Previously Submitted forPayment: Maximus further
agrees that within 90 days of the Effective Date of this Agreement it shall
identify to applicable Medicare and TRICARE fiscal intermediaries, carriers,
and/or contractors, and Medicaid and FEHBP fiscal agents, any unallowable
costs
(as defined in this Paragraph) included in payments previously sought from
the
United States, or any State or District of Columbia Medicaid program, including,
but not limited to, payments sought in any cost reports, cost statements,
information reports, or payment requests already submitted by Maximus or
any of
its subsidiaries or affiliates, and shall request, and agree, that such cost
reports, cost statements, information reports,
or payment requests, even if already settled, be adjusted to account for
the
effect of the inclusion of the unallowable costs. Maximus agrees that the
United
States, at a minimum, shall be entitled to recoup from Maximus any overpayment
plus applicable interest and penalties as a result of the inclusion of such
unallowable costs on previously-submitted cost reports, information reports,
cost statements, or requests for payment.
Any
payments due after the adjustments have been made shall be paid to the United
States pursuant to the direction of the Department of Justice and/or the
affected agencies. The United States reserves its rights to disagree with
any
calculations submitted by Maximus or any of its subsidiaries or affiliates
on
the effect of inclusion of unallowable costs (as defined in this Paragraph)
on
Maximus or any of its subsidiaries or affiliates’ cost reports, cost statements,
or information reports.
d. Nothing
in this Agreement shall constitute a waiver of the rights of the United States
to audit, examine, or re-examine Maximus’s books and records to determine that
no unallowable costs have been claimed in accordance with the provisions
of this
Paragraph.
11. Maximus
agrees to cooperate fully and truthfully with the United States’ investigation
of individuals and entities not released in this Agreement. Upon reasonable
notice, Maximus shall make reasonable efforts to facilitate access to, and
encourage the cooperation of, its directors, officers, and employees for
interviews and testimony, consistent with the rights and privileges of such
individuals, and shall furnish
to
the United States, upon reasonable request, all nonprivileged documents and
records in its possession, custody, or control relating to the Covered
Conduct.
12.
This Agreement is intended to be for the benefit of the Parties only. The
Parties do not release any claims against any other person or entity, except
to
the extent provided for in Paragraphs 2, 3, and 4 above.
13.
Maximus waives and shall not seek payment on behalf of itself or any other
entity for any of the health care xxxxxxxx covered by this Agreement from
any
health care beneficiaries or their parents, sponsors, legally responsible
individuals, or third party payors based upon the claims defined as Covered
Conduct.
14. Maximus
warrants that it has reviewed its financial situation and that it currently
is
solvent within the meaning of 11 U.S.C. § § 547(b)(3) and 548(a)(1 )(B)(ii)(I),
and shall remain solvent following payment to the United States of the Payment
Amount. Further, the Parties warrant that, in evaluating whether to execute
this
Agreement, they (a) have intended that the mutual promises, covenants, and
obligations set forth constitute a contemporaneous exchange for new value
given
to Maximus, within the meaning of 11 U.S.C. § 547(c)(1); and (b) conclude that
these mutual promises, covenants, and obligations do, in fact, constitute
such a
contemporaneous exchange. Further, the Parties warrant that the mutual promises,
covenants, and obligations set forth herein are intended to and do, in fact,
represent a reasonably equivalent exchange of value that is not intended
to
hinder, delay, or defraud any entity to which Maximus was or became indebted
to
on or after the date of this transfer, within the meaning of 11 U.S.C. §
548(a)(1).
15. Except
as expressly provided to the contrary in this Agreement, each Party shall
bear
its own legal and other costs incurred in connection with this matter, including
the preparation and performance of this Agreement.
16. Maximus
represents that this Agreement is freely and voluntarily entered into without
any degree of duress or compulsion whatsoever.
17. Relator
represents that this Agreement is freely and voluntarily entered into without
any degree of duress or compulsion whatsoever.
18. This
Agreement is governed by the laws of the United States. The Parties agree
that
the exclusive jurisdiction and venue for any dispute arising between and
among
the Parties under this Agreement is the United States District Court for
the
District of Columbia, except that disputes arising under the CIA shall be
resolved exclusively under the dispute resolution provisions in the
CIA.
19. This
Agreement constitutes the complete agreement between the Parties. This Agreement
may not be amended except by written consent of the Parties.
20. Upon
receipt of the payment described in Paragraph 1.a -1 .c.. above, the United
States shall file a Notice of Intervention, and Relator and the United States
shall promptly sign and file in the Civil Action a Joint Stipulation of
Dismissal with prejudice of the United States’ and Relator’s claims contained in
the Civil Action pursuant to the terms of the Agreement.
20. The
individuals signing this Agreement on behalf of Maximus represent and warrant
that they are authorized by Maximus to execute this Agreement. The individual(s)
signing this Agreement on behalf of Relator represent and warrant that
she
is
authorized by Relator to execute this Agreement. The United States signatories
represent that they are signing this Agreement in their official capacities
and
that they are authorized to execute this Agreement.
21. This
Agreement may be executed in counterparts, each of which constitutes an original
and all of which constitute one and the same Agreement.
22. This
Agreement is binding on Maximus’s successors, transferees, heirs, and
assigns.
23. This
Agreement is binding on Relator’s successors, transferees, heirs, and
assigns.
24. All
Parties consent to the United States’ disclosure of this Agreement, and
information about this Agreement, to the public.
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25. This
Agreement is effective on the. date of signature of the last signatory to
the
Agreement (Effective Date of this Agreement). Facsimiles of signatures shall
constitute acceptable, binding signatures for purposes of this
Agreement.
THE
UNITED STATES OF AMERICA
| DATED: 7/20/07 |
BY:
|
/s/ Xxxxx X. Xxxxxx | ||
|
Xxxxx
X. Xxxxxx
Trial
Attorney
Commercial
Litigation Branch
Civil
Division
United
States Department of Justice
|
||||
| DATED: 7/20/07 |
BY:
|
/s/ Xxxxxx Xxxxxxxxx | ||
|
Xxxxxx
Xxxxxxxxx
Assistant
United States Attorney
United
States Attorney's Office for the
District
of Columbia
|
||||
| DATED: 7/20/07 |
BY:
|
/s/ Xxxxxxx X. Xxxxxx | ||
|
Xxxxxxx
X. Xxxxxx
Assistant
Inspector General for Legal Affairs
Office
of Counsel to the Inspector General
Office
of Inspector General
United
States Department of Health
and
Human Services
|
MAXIMUS
| DATED: July 20, 2007 |
BY:
|
/s/ Xxxxx X. Xxxxxxx | ||
|
Xxxxx
X. Xxxxxxx
General
Counsel and Secretary
Maximus
|
||||
| DATED: July 20, 2007 |
BY:
|
/s/ Xxxxxxxx X. Xxxxxxxx | ||
|
Xxxxxxxx
X. Xxxxxxxx, Esq.
Counsel
for Maximus
|
RELATOR
| DATED: 7-19-07 |
BY:
|
/s/ Xxxxxxxx Xxxxxx | ||
|
Xxxxxxxx
Xxxxxx
|
||||
| DATED: 7/19/07 |
BY:
|
/s/ Xxxxxx Xxxxx III | ||
|
Xxxxxx
Xxxxx, III, Esq.
Allred,
Bacon, Xxxxxxxx & Young
Counsel
for Xxxxxxxx Xxxxxx
|
