Outcome Health agrees to pay $70M to victims of fraud scheme

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Outcome Health reached a non-prosecution agreement with the U.S. Department of Justice in which the health technology startup will pay $70 million to victims of a fraud scheme perpetrated by former employees, including the company's two co-founders.

According to an Oct. 30 release from the DOJ, Outcome Health has already distributed approximately $65.5 million of the required amount. Under the terms of the agreement, the company will cooperate with the ongoing federal investigation of the individuals responsible for defrauding clients and will enhance their compliance program and internal controls to prevent future illegal activities.

Per the DOJ release, Outcome admitted in resolution documents that former executives and employees had defrauded clients, many of them pharmaceutical companies, by selling nonexistent advertising inventory from 2012 to 2017.

According to the resolution documents, despite underdelivering on ad campaigns, the former employees continued to invoice clients for the full campaigns and falsified affidavits, patient engagement metrics and other data on the campaigns' effectiveness. This fraudulent activity subsequently resulted in falsely inflated revenue reports in 2015 and 2016, which were used to raise millions more in debt and equity financing.

"We're thrilled to resolve this matter, as it enables us to move forward and focus on our mission to be the indispensable partner to patients, providers and industry partners during moments of care," Matt McNally, Outcome Health CEO, said in a statement.

"Over the past two years, Outcome Health implemented a comprehensive overhaul of our compliance and campaign-reporting policies," he continued. "These actions included engaging third-party auditors to ensure reporting accuracy, investing in partnerships with organizations like BPA Worldwide to validate key performance indicators, overhauling internal controls to improve the reliability of reporting and forming an all-new leadership team, myself included." 

More articles on legal and regulatory issues:
Former executive of Cleveland Clinic spinoff defrauded system of $2.7M
Dignity Health's $100M class-action settlement is unreasonable, judge says
Iowa physician accused of filing 89 fraudulent Medicare, Medicaid claims

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