Arizona Nursing Facility Where Disabled Woman Gave Birth to Baby Boy Has a History of Suspected Health Care Fraud

Hacienda HealthCare, the parent company of numerous Phoenix nursing homes and health care facilities, made headlines when it was revealed that a woman with serious disabilities, who is unable to talk, has limited movement and has been under Hacienda’s care since she was three, gave birth to a baby boy unexpectedly.

Arizona Nursing Facility Where Disabled Woman Gave Birth to Baby Boy Has a History of Suspected Health Care Fraud

This horrific story has prompted criminal charges and a renewed interest in Hacienda’s management (or mismanagement, as it were). The company has been under scrutiny for suspected Medicaid fraud for at least three years.

In 2016, Arizona Health Care Cost Containment System (“AHCCCS”)—the agency that administers Arizona’s Medicaid program—initiated an investigation into Hacienda, believing that administrators improperly shifted overhead expenses around and overbilled Medicaid by $3.4 million between July 2013 and June 2014.

However, Hacienda rejected multiple subpoenas and failed to turn over thousands of critical documents, leaving AHCCCS with no way to complete its investigation. AHCCCS filed a lawsuit against the company in 2017 in an attempt to force it to hand over the records, and a judge ruled in the agency’s favor. However, Hacienda appealed and the case has yet to be resolved.

A related criminal probe was also opened by the Attorney General’s Office in 2016. The AZ Department of Economic Security (“DES”) found that Hacienda, which received more than $20 million in public funds each year, had overstated its administrative costs and overbilled the state. DES auditors discovered that the cost of care per patient was almost three times the national average: $386,000 at Hacienda versus $134,000 at comparable facilities.

Hacienda also said it had 13 vehicles for just 35 patients and reported mileage that would have amounted to 3,663 miles per client, which auditors said was “enough to cross the state from east to west 10 times per client.”

DES presented these findings to the Attorney General’s Office, seeking to terminate Hacienda’s state contracts and close the facility, but the probe was closed a year later due to lack of evidence. No charges were filed.

Hacienda has come to the attention of state officials for patient treatment as well. In 2013, the Arizona Department of Health Services determined that an employee had made obscene comments to patients, even telling one that his penis was erect. In 2017, the Centers for Medicare and Medicaid Services found that staff regularly came and left the shower room while residents were naked, even when they were not actively caring for anyone and should not have been entering the shower room.

Despite the allegations of fraud and sub-par patient care, Hacienda continued to receive federal and state funding, only losing it when it became clear that a patient was raped. The company received $6.7 million in state Medicaid funding from 2009 until Oct. 2018.

Former DES director Tim Jeffries, who served in the role from 2015 to 2016, led the audit of Hacienda’s finances in 2016. In his first 30 days in the position, he identified $4 million in overbilling at Hacienda and made resolving the fraud one of his priorities. He urged the Attorney General’s Office to press criminal charges and close the facility, but Jeffries was fired for alleged mismanagement before that could happen.

Jeffries believes the failed criminal probe and his firing were driven by Bill Timmons, Hacienda’s 30-year chief executive. It’s possible Timmons used his connections to Arizona Governor Doug Ducey and other Republican leaders to thwart the investigation. Jeffries also believes that if the state took his warnings seriously in 2016 and closed the facility, the rape would have never happened.  

Timmons quickly resigned once a criminal investigation related to the rape was initiated in Jan. 2018. Until then, however, Timmons was extremely well paid. He earned $674,212 in 2017, double what he earned in 2008. Fraud allegations and criminal investigations apparently had no impact on his salary.

In the most recent criminal case, Nathan Sutherland, a former Hacienda nurse, has been charged with sexual assault. He pleaded not guilty and is scheduled for another court appearance in March 2019. Although nothing will undo the horrible abuse that happened at Hacienda, hopefully, this criminal case will put an end to patient mistreatment and fraud in its facilities.

If you see something wrong, say something. Medicaid fraud hurts taxpayers, hurts our economy, harms patients and is just plain wrong.

If you know of a healthcare provider that is cheating its patients, call us. We can assist you in putting an end to the fraud and help you receive a large cash reward for your trouble. Not interested in an award, we can help you get your information to the correct state Medicaid Fraud Control Unit. Connect with us 888.742.7248 or ONLINE.


Medicaid Fraud Hotline: 888.742.7248 or Report Online
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