Former Hacienda HealthCare CEO, CFO face felony charges

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Phoenix-based Hacienda HealthCare has entered into an $11 million civil settlement with the Arizona attorney general's office, and two of the company's former executives have been indicted in an elaborate fraud case. 

Hacienda HealthCare's former CEO William Timmons and former CFO Joseph O'Malley face multiple felony charges for their alleged roles in a scheme that involved misallocating funds from the Arizona Department of Economic Security's division of developmental disabilities and the Arizona Health Care Cost Containment System. The former executives allegedly manipulated costs to avoid repayments of state funds and used overpayments to inflate salaries and bonuses. 

The indictment further alleges that Mr. Timmons directed the fraudulent billing of health insurance companies for uses of Synagis, an injection given once a month throughout respiratory syncytial virus season. Mr. Timmons allegedly told staff not to discard Synagis vials after a single use and to administer the remaining medication to patients. Health insurance companies were still billed for the entire cost of a vial, according to the attorney general's office. 

Mr. Timmons served as Hacienda's CEO from July 1989 to January 2019, and Mr. O'Malley served as the company's CFO from 2013 to 2019. The alleged fraud scheme occurred from 2013 until Mr. Timmons resigned in January 2019, according to the attorney general's office. 

The attorney general's office announced the charges against the two former executives on Sept. 2, the same day it released details on a civil settlement with Hacienda HealthCare.

Hacienda HealthCare agreed to pay the state more than $11 million to resolve allegations that it engaged in improper billing, inflated reported expenses and misallocated direct and indirect costs from 2013 to 2018. The allegedly fraudulent activity resulted in Hacienda HealthCare receiving at least $10.9 million in overpayments  from the Arizona Health Care Cost Containment System. 

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