A bankruptcy judge has been asked to dissolve or sell the Getchell Agency amid allegations of fraud and mismanagement by the U.S. Department of Health and Human Services.
The federal agency ordered the Maine Department of Health and Human Services to immediately stop making MaineCare payments to the business, which operates residential homes in Bangor for adults with disabilities, according to documents filed in U.S. Bankruptcy Court in Bangor. MaineCare, funded jointly by the state and federal governments, is Getchell’s only source of income.
The Getchell Agency denied the fraud allegations. The company is not facing criminal charges in connection with the alleged fraud.
Owned by Rena J. Getchell, the agency serves about 70 adults with physical, cognitive and developmental disabilities in residential care facilities, according to court documents. It has operated for 18 years.
The agency filed for bankruptcy on March 25, 2016, after former employees filed a class action lawsuit in July 2013 over unpaid time for employees who slept on site during overnight shifts.
Those claims were settled earlier this year in the bankruptcy proceeding for $958,300, according to court documents. Under the terms of the settlement, 259 former employees are to be paid an average settlement of $3,700 each.
The fraud allegations first were alleged on Nov. 9 in a sealed bankruptcy court document. The allegations were repeated Tuesday in a motion asking the court to convert the Getchell Agency’s bankruptcy from Chapter 11, which would allow the business to reorganize its debt and continue operating, to Chapter 7, which would force Getchell to sell the business or shut down.
The new motion was filed by the bankruptcy trustee’s office, which is responsible for ensuring creditors are compensated. It also asks the judge to appoint a special trustee to run the Getchell Agency while it is dismantled or sold.
One of the reasons cited in the motion was the “recently discerned good cause to conclude that the Getchell Agency falsified documentation” of services it provided to MaineCare enrollees in order to offset a more than $1 million in alleged overpayments that Maine DHHS sought to recoup. That amount had been reduced to less than $800,000, according to a June 20 document filed by Getchell’s attorneys.
Specifics about the alleged fraud were not outlined in court documents but in August, U.S. Bankruptcy Judge Peter Cary appointed a special examiner to investigate. The examiner’s report has not yet been filed with the court.
Getchell’s spokeswoman, Terrilyn Simpson, said Tuesday in an email that the fraud allegations appear to have arisen from a “document grab” by state DHHS at Getchell’s office four years ago.
“DHHS walked into the office and demanded — in a typed request that was not on letterhead and which contained no signature — that all documents be turned over to them,” Simpson said. “The review of those documents has been ongoing and in the past year, DHHS identified ten documents out of more than 20,000 that have clerical errors.”
Simpson said the review of the documents was hindered because DHHS did not have standardized forms, Getchell and others agencies like it must create their own.
“The Getchell Agency was told that its documentation process was too detailed and lengthy, for instance,” Simpson said.
She also said staff members had stayed in hospital rooms with clients who had no family members and needed 24-hour supervision and billed DHHS for that time. Those claims were denied by DHHS, which Getchell is still fighting.
“And now, frankly, DHHS is playing gotcha at the expense of the clients,” Simpson said.
Examples of alleged mismanagement also were included in the motion.
Getchell’s “financial condition appears to be spiraling downwards,” it said. The company reported a net loss in August of nearly $296,000 and of more than $133,000 in October, the motion claimed. Unpaid bills in October totalled nearly $133,500. Getchell failed to file a financial report for September as the court required, the motion alleged.
The September report was filed Wednesday, according to Simpson.
Maine DHHS supports forcing Getchell to sell or dissolve the business, according to court documents.
A hearing on a motion to convert Getchell’s bankruptcy from a Chapter 11 to a Chapter 7 case is set for at 9 a.m. Tuesday in Portland.
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