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Ex-mental health providers sue NM contractor

Las Cruces Sun-News (NM) - 6/25/2016

June 25--LAS CRUCES -- Four ex-community mental health providers in Doña Ana County have joined with others from around New Mexico to sue a former state contractor that once oversaw hundreds of millions in Medicaid spending.

In all, 10 former providers of Medicaid-funded behavioral health care accused the state's former contracted overseer of spending -- United Healthcare, and its subsidiary, OptumHealth New Mexico -- of interfering with the groups' contracts and carrying out unfair practices that led to the state suspending in mid-2013 about $11.5 million in reimbursements for patient care provided by the nonprofits, according to court documents. The lawsuit also names the auditing firm -- Public Consulting Group Inc. -- that carried out a controversial audit used as a basis for cutting the payments to the community providers, who numbered 15 in total.

Two former major providers from Las Cruces -- Southwest Counseling Center Inc., which provided adult care, and Families & Youth Inc., which provided youth care -- are among the 10 that filed the new lawsuit. Also signing onto the suit were Southern New Mexico Human Development, which offered services in southern Doña Ana County, and TeamBuilders Counseling Services Inc., which had a presence in several counties, including Doña Ana.

The ousting of former providers -- and subsequent installation of Arizona-based providers in New Mexico -- was a shake-up that resulted in care disruptions for people battling addictions and severe mental illness.

Second lawsuit

The lawsuit, filed Thursday in state court in Santa Fe, mirrors one launched in February by one of the Arizona-based companies, La Frontera. That organization accused United Healthcare and its subsidiaries of orchestrating a cover-up of their own contractual failings with the state by accusing the former community health providers -- a number of which La Frontera was brought in to replace -- of fraud.

The 10 former providers, in the new court filing, also allege that United Healthcare failed to fulfill its contractual terms to the state and covered that up "by blaming United's subcontracted, participating providers, including Plaintiffs, for fraud through allegations of non-compliance with United's claims processing system." The ex-providers also alleged the company persuaded the state to recruit new providers from Arizona to replace them.

United Healthcare, via OptumHealth New Mexico, was the state's overseer of hundreds of millions in Medicaid -- and some non-Medicaid-derived -- funds, meant to reimburse providers for a range of mental-health and substance-abuse care provided to clients. The company was the sole overseer of funding via a contract that was originally set to last four years and end in June 2013. But, after a September 2012 extension was granted, the contract lasted 4.5 years and ended in December 2013, according to court records and state documents.

"To achieve its New Mexico contract and company revenue goals, United needed an exit strategy from its Statewide Contract that would expire June 30, 2013," the providers' lawsuit alleges. "United knew its claims processing system never met its Statewide contract obligations owed" to the state and the former providers.

The former providers also allege the granting of a six-month contract extension to UnitedHealthcare failed to comply with the New Mexico Procurement Code, according to the complaint.

In their lawsuit, the ex-providers claim that in late October 2012 a former official with OptumHealth issued a proposal to the state to help UnitedHealthcare solve its alleged "'institutional fraud' problem by terminating United's existing contracted 'bad actors'" and substituting Arizona providers, according to the court filing.

UnitedHealthcare also inquired about who would keep any money recovered from the now-former providers, which resulted in a contract amendment between the company and state that specified the company could keep "up to 40 percent of all state funds recovered from any United subcontractor accused of fraud," according to the complaint.

The complaint alleges the state, UnitedHealthcare and PCG "agreed to audit" the former behavioral health providers across New Mexico "with the pre-determined outcome" that the state would find there were "credible allegations of fraud" against the providers, which in turn would lead to a cut-off of their funding.

The ex-providers alleged UnitedHealtcare and PCG "played an active and substantial part in causing" the state's Human Services Department to suspend payments to the organizations, the complaint states.

"Upon information and belief, Defendants acted with an improper motive to destroy Plaintiffs' businesses and other improper motives yet to be discovered," the complaint states.

The 10 former providers are seeking to recover the payments withheld from them, as well as punitive damages, according to court records. They're represented by Albuquerque attorneys Bryan J. Davis and William G. Gilchrist.

An official with Southwest Counseling Center Inc. referred questions about the lawsuit to Davis, who was not available for comment Friday afternoon. A representative from UnitedHealthcare said she did not receive the request for comment until after business hours and was not allowed to comment.

Diana Alba Soular may be reached at 575-541-5443, dalba@lcsun-news.com or @AlbaSoular on Twitter.

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(c)2016 the Las Cruces Sun-News (Las Cruces, N.M.)

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