News Releases

Rutledge Announces Settlements with Preferred Family Health Totaling $6.5 Million

Says, ‘I will do everything in my power to hold any Medicaid provider accountable’

LITTLE ROCK – Arkansas Attorney General Leslie Rutledge today announced that multimillion dollar federal and state civil settlements have been reached with Preferred Family Healthcare (PFH). Both settlements were based on an investigation conducted by the Attorney General Office’s Medicaid Fraud Control Unit (MFCU) into false claims submitted to the Arkansas Medicaid Program by former PFH employees. PFH has agreed to pay $4,555,632.10 to resolve a federal false claims case and $1,944,367.90 in a separate state settlement under the State False Claims Act. In addition to the larger settlement, five former employees of PFH have been charged in state court with Medicaid fraud and an additional employee settled false claims or actions.

“The false claims addressed in these settlements were the result of a culture of corruption at the highest levels of PFH in Arkansas, and as Attorney General, I will do everything in my power to hold any Medicaid provider accountable when Medicaid Program rules or the law is violated,” said Attorney General Rutledge. “This settlement shows we will aggressively pursue any company that deceives Arkansans or takes advantage of the Medicaid program which provides medically-necessary treatment for many Arkansans.”

Through most of 2016, the MFCU investigated fraud in the Rehabilitative Services for Persons with Mental Illness (RSPMI) program. In September 2016, an informant and employee of PFH made a complaint to the MFCU claiming PFH had been billing Medicaid for counseling services not rendered or over-billed. These allegations involved inappropriate billing by individual therapists.

In December 2017, the informant contacted the MFCU with additional information that indicated PFH may have been inappropriately billing an entire class of recipients known as Qualified Medicare Beneficiaries (QMBs). Using data analytics, the MFCU was immediately able to confirm that claims for services improperly provided to this population were being submitted to Medicaid for payment rather than Medicare. While it was clear that the submitted claims were improper, it was not clear who within PFH was submitting the claims, whether they understood what they were doing was illegal, or how the claims were able to get through the edits in place in the Medicaid payment system that should have rejected the claims.

In early January 2018, the MFCU served PFH with a “Request for Information” seeking to determine how this had occurred. Later that same month the state’s informant filed a federal sealed qui tam action against PFH under the federal false claims act. A qui tam action is a federal lawsuit brought by a private citizen to stop or prevent fraud and abuse of federal dollars.

PFH, a large mental health care organization, offered a range of services which included mental and behavioral health, substance use, employment, developmental disabilities, child welfare, and medical. Until October 2018, there were approximately 50 clinics throughout Arkansas. PFH no longer operates in the State of Arkansas.

The MFCU was assisted in its investigation by the Office of the Arkansas Medicaid Inspector General and the HHS-OIG-Office of Investigations.

Medicaid fraud occurs when providers use the Medicaid program to obtain money to which they are not entitled. To report Medicaid fraud or abuse or neglect in residential care facilities, contact the Attorney General’s Medicaid fraud hotline at (866) 810-0016 or