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Healthcare NPO Pays $8M In Fraud, Bribery Case

Preferred Family Healthcare (PFH), Springfield, Mo., will pay the State of Arkansas and the federal government more than $8 million in forfeiture and restitution. The payments stem from alleged criminal conduct of several former employees and officers.

Separate criminal cases against 10 former employees or associates are either in progress or have resulted in conviction and sentencing.

Current leaders within PFH signed a non-prosecution agreement. In doing so, they acknowledged that former employees conspired to embezzle from the organization, as well as bribe elected officials within the Arkansas House of Representatives and the Arkansas Senate.

While the nonprofit’s board of directors was deemed not culpable as a result of not receiving full or accurate information, the board did not exercise oversight, thereby allowing the employees to allegedly violate federal law, according to a statement from the U.S. Attorney’s Office for the Western District of Missouri.

As part of the non-prosecution agreement, PFH will pay more than $6.9 million to the federal government, and pay restitution of more than $1.1 million to the State of Arkansas. PCH does not currently list any locations in Arkansas. The organization offers integrated health services in four states: Illinois, Kansas, Missouri and Oklahoma.

Much of PFH’s annual revenue comes in the form of Medicaid reimbursements, according to the statement from the U.S. Attorney’s Office for the Western District of Missouri. According to PCH’s federal Form 990 for the 12 months ending June 30, 2020, the organization had total revenue of $143.8 million and program service revenue of $126.9 million.

“The misuse and misappropriation of millions of federally sourced funds, designated for employment training and behavioral healthcare services to the public, by former executives of Preferred Family Healthcare (PFH) is a gross abuse of the positions of trust they once held within the organization,” said Special Agent-in-Charge Steven Grell of the U.S. Department of Labor, Office of Inspector General, via a statement.

Asked for comment, a spokesperson for PFH offered a statement which read, in part, “This has been a very challenging period for PFH but there have been some benefits from the process. As the government acknowledges in the Non-Prosecution Agreement, PFH replaced the former executives with a leadership team that values compliance, accountability, and transparency and instituted a robust compliance program designed to deter and detect fraud and illegal actions. The Government also credited PFH for its extensive cooperation during the investigation. Throughout, PFH and our dedicated employees have remained committed to providing necessary services to our clients and the communities where we work.”

In October 2020, PFH executives signed an agreement asserting that the organization had voluntarily established a chief compliance officer, a compliance committee, a compliance training and education program, a confidential disclosure reporting hotline, auditing and monitoring activities, and a variety of policies aimed at ensuring the organization’s participation in the federal health care programs confirms to all federal and state laws and federal health care program requirements.

According to the Department of Justice statement, the individuals who have faced or are facing actions for their role in the embezzlement and bribery cases include:

  • Former Chief Executive Officer Marilyn Luann Nolan, who pleaded guilty to conspiracy to embezzle and misapply the funds of a charitable organization that received federal funds. Nolan’s sentencing hearing has not been scheduled.
  • Former Director of Operations and Executive Vice President Robin Raveendran, who pleaded guilty to conspiracy to commit bribery concerning programs receiving federal funds. Raveendran’s sentencing hearing has not been scheduled.
  • Former head of clinical operations Keith Fraser Noble, who pleaded guilty to concealment of a known felony. Noble’s sentencing hearing has not been scheduled.
  • Former employee and head of operations and lobbying in Arkansas, Milton Russell Cranford, who pleaded guilty to one count of federal program bribery and was sentenced to seven years in federal prison without parole.
  • Donald Andrew Jones, a political consultant, who pleaded guilty to his role in a conspiracy to steal from an organization that receives federal funds.
  • Former Arkansas State Senator Jeremy Hutchinson of Little Rock, Ark., who pleaded guilty to conspiracy to commit federal program bribery. Hutchinson’s sentencing hearing has not been scheduled.
  • Former Arkansas State Representative Eddie Wayne Cooper, of Melbourne, Ark., who pleaded guilty to conspiracy to embezzle more than $4 million from PFH. Cooper’s sentencing hearing has not been scheduled.
  • Former Arkansas State Senator and State Representative Henry (Hank) Wilkins IV, who pleaded guilty to conspiracy to commit federal program bribery, and devising a scheme and artifice to defraud and deprive the citizens of the State of Arkansas of their right to honest services. Wilkins’ sentencing hearing has not been scheduled.

Additionally, PFH’s former chief operating officer and chief financial officer were indicted by a federal grand jury on March 29, 2019. Both entered pleas of not guilty. Their trial is scheduled to begin on Oct. 3, 2022.

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