Outpatient Mental Health Company Will Pay $4.6 Million To Resolve False Claims Allegations

BOSTON — Pathways of Massachusetts (Pathways), a former Massachusetts outpatient behavioral health provider, and Molina Healthcare, Inc. (Molina), its former corporate parent, will pay $4.6 million to resolve false claims allegations by the Attorney General’s Office, as well as additional allegations made by whistleblowers, Attorney General Maura Healey and United States Attorney Rachael Rollins announced today.

According to the AG’s Office, Pathways caused fraudulent claims to be submitted to the state’s Medicaid Program, known as MassHealth, for behavioral health care services provided to patients by unlicensed and improperly supervised staff members. An

investigation by the AG’s Office found that Pathways failed to meet the regulatory requirements for frequency and adequacy of supervision, the qualifications of its supervisors, and that Pathways billed for psychotherapy services rendered by unlicensed individuals who were not supervised by appropriately licensed professionals.

“This company routinely allowed unlicensed and unsupervised mental health professionals to provide care to patients, all while billing MassHealth for it,” said AG Healey. “MassHealth patients deserve to receive treatment from qualified individuals, and my office will continue to hold providers accountable for violating these fundamental MassHealth requirements.”

“Providers of mental health services have an obligation to ensure that patients receive treatment that is necessary, appropriate and is administered with proper clinical supervision,” said Phillip M. Coyne, Special Agent in Charge, U.S. Department of Health & Human Services, Office of Inspector General – Boston Region. “To deviate from legal requirements in order to maximize profits and potentially jeopardize patient safety and well-being is completely unacceptable. We are proud of the citizens who speak out to help protect our federal healthcare programs and hold accountable those who seek to wrongfully obtain vital taxpayer dollars.”

The whistleblowers in this case, four former Pathways employees, initiated a qui tam action in the U.S. District Court of Massachusetts, U.S. ex rel. Collins, et al. v. Molina Healthcare, Inc., et al. The whistleblowers worked at Pathways between 2014 and 2018 and alleged in their suit that Pathways violated the False Claims Act because its clinics lacked adequate staffing to qualify as eligible mental health centers.

Separately, the AG’s Medicaid Fraud Division initiated an investigation into Pathways after a referral from MassHealth. This investigation and the qui tam suit culminated in the settlement announced today, in which representatives from the AG’s Office and the U.S. Attorney’s Office negotiated a final agreement to resolve the False Claims Act allegations.

Pathways ceased all operations in the state, and Molina has agreed to settle the federal and state False Claims Act claims at issue in the Medicaid Fraud Division’s investigation, as well as the whistleblower allegations, for $4.6 million.

This settlement follows a multi-year effort by AG Healey’s Medicaid Fraud Division, including several successful enforcement actions and settlements, to ensure high-quality behavioral health services for MassHealth members. Most recently, in October 2021, the AG’s Office reached a settlement with the private equity firm and former executives of South Bay Mental Health Center, Inc., who agreed to pay $25 million for allegedly causing fraudulent claims to be submitted to  MassHealth for services rendered by unqualified clinicians who did not receive required supervision. In July 2020, the AG’s Office announced the resolution of the Escobar case, in which the AG’s Office alleged that the defendants caused the submission of claims for services provided by unlicensed staff who were not properly supervised. As part of that settlement, defendant Universal Health Services (UHS) agreed to pay $10 million and implement a multi-year independent compliance monitoring program.

This matter was handled by Managing Attorney Ian Marinoff, Assistant Attorney General Matthew Jones, and Investigators Heather Dwyer and William Welsh, all of the AG’s Medicaid Fraud Division.  The U.S. Attorney’s Office for the District of Massachusetts, Office of Inspector General for the United States Department of Health and Human Services, and MassHealth provided substantial assistance to this investigation and the resulting settlement.

The AG’s Medicaid Fraud Division receives 75 percent of its funding from the U.S. Department of Health and Human Services under a grant award. The remaining 25 percent is funded by the Commonwealth of Massachusetts.