The Tennessee Attorney General’s office and a former employee are accusing a Franklin health care nonprofit of fraud.

In March, the Attorney General’s office filed a complaint in U.S. District Court that accuses ProHealth Rural Health Solutions of submitting false invoices to the state that inflated the number of Medicaid patients the company served.

According to a press release from the Attorney General’s office, the invoices led to $6 million in unearned payments through TennCare, the state’s health care program for children, pregnant women, elderly people and people with disabilities. The state is asking for more than $18 million in repayment and fines.

In addition to suing the company in U.S. District Court, the state is also seeking repayment through bankruptcy court. ProHealth filed for chapter 11 bankruptcy in August 2018.

In December, the state filed a complaint in the bankruptcy case seeking $18 million for overpayments through TennCare. A spokesperson for the Attorney General’s office called the new complaint in district court the basis for the state’s claim in bankruptcy court.

A lawyer representing ProHealth in the bankruptcy case was not available for questions.

According to both complaints, ProHealth CEO Ray White knew that the company’s software system consistently overstated the number of patient visits, but submitted those claims anyway.

The complaints also state that ProHealth employees tried to warn White about the problems multiple times.

According to the district court complaint, at one point the company’s medical director counted the number of patients by hand and compared it to the software’s calculations. When he emailed White about the discrepancy, the complaint says White responded in red capital letters.

“THE DATA IS CORRECT. IT CAME FROM THE COMPUTER. ANY DATA NOT IN THE COMPUTER MEANS NOTHING,” White wrote, according to the district court complaint.

The Tennessee Comptroller conducted an audit of ProHealth in 2017. The audit found the clinic reported over-reported the number of TennCare patients by about 56,000 people between 2012 and 2017.

Auditors found that some visits were double and triple counted because when patients received multiple services from the same physician during the same visit. The report said those services should have counted as one visit.

According to the report, auditors discussed the issue with managers for ProHealth who agreed that double counting the patients was a mistake.

In a letter from the company within the audit, ProHealth claims that “no intentional or otherwise false claims were submitted for reimbursement.” The company says it acted in good faith, and that it thought the patient numbers it submitted were legitimate.

On Monday, ProHealth submitted a motion to convert its bankruptcy case from chapter 11 to chapter 7. Chapter 11 bankruptcy allows a company to reorganize, while chapter 7 bankruptcy means a company will sell off its assets.

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