Exhibit 10.1
 

SETTLEMENT AGREEMENT
 
I. PARTIES
 
This Settlement Agreement (“Agreement”) is entered into among the United States
of America, acting through the United States Department of Justice and on behalf
of the Office of Inspector General (“OIG-HHS”) of the Department of Health and
Human Services (“HHS”) (collectively the "United States”); relator Benjamin
Turner, and Maximus, Inc. (“Maximus”) (hereafter referred to as “the Parties”),
through their authorized representatives.
 
II. PREAMBLE
 
As a preamble to this Agreement, the Parties agree to the following:
 
A.            Maximus, a Virginia corporation with headquarters in Reston,
Virginia, is a government services company, providing government program
operations, consulting, and information technology services primarily to state
and local governments.
B.            In March 1999, Maximus entered into a contract (“Contract”) with
the District of Columbia’s Child and Family Services Agency (“CFSA”) to assist
the District of Columbia in collecting revenue for Targeted Case Management
Services (“TCM”) provided by CFSA. In November 2002, as a result of a review
conducted by the Centers for Medicaid and Medicare Services (“CMS”), a component
of the United States Department of Health and Human Services, of CFSA’s TCM
claims, the District of Columbia reduced its TCM claims by $12.15 million to
adjust for those claims it had previously submitted for services that were
either not performed or that lacked documentation that they had been performed.
 
 
 

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C.            Benjamin Turner (the “Relator”) is an individual resident of Rhode
Island. On June 21, 2005, Relator filed a qui tam action in the United States
District Court for the District of Columbia captioned United States of America
ex rel. Benjamin Turner and The Government of the District of Columbia ex rel.
Benjamin Turner v. Maximus (hereinafter “the Civil Action”). From March 1999
through June 2002, Relator was a Director in the Human Services Division of
Maximus and was assigned to work on the Contract that Maximus had with CFSA.
D.            The United States contends that Maximus submitted or caused to be
submitted claims for payment to the Medicaid Program (Medicaid), 42 U.S.C. §§
1396-1 396v, for TCM services for Abused or Neglected Children provided by CFSA
pursuant to the District of Columbia’s State Plan for TCM reimbursements and
pursuant to Maximus’s Contract with CFSA. The United States further contends
that it has certain civil claims, as specified in Paragraphs 2 and 4, below,
against Maximus for engaging in the following conduct (hereinafter referred to
as the “Covered Conduct”): during the period from July 1, 1999 to June 1, 2004,
Maximus caused to be submitted to CMS on behalf of CFSA and the District of
Columbia’s Medical Assistance Administration (MAA) false claims or statements
for TCM services for Abused or Neglected Children that lacked documentation
those services had been performed or that were not performed.

 
 

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E.           The United States also contends that it has certain administrative
claims, as specified in Paragraph 4 below, against Maximus for engaging in the
Covered Conduct.
F.           This Agreement is neither an admission of liability (or admission
of any matter of law or fact) by Maximus nor a concession by the United States
that its claims are not well founded.
G.           To avoid the delay, uncertainty, inconvenience, and expense of
protracted litigation of the above claims, the Parties reach a full and final
settlement pursuant to the Terms and Conditions below.
 
III. TERMS AND CONDITIONS
 
1.            The Parties agree to the “Settlement Amount” of $42.65 million, as
follows:
a.           The Settlement Amount will be satisfied in part by the $12.15
million recovered by the United States through adjustments in payments made from
CMS to CFSA as referenced in Preamble Paragraph B above;
b.           Maximus agrees to pay $30.5 million (“Payment Amount”) no later
than 2 business days after the Effective Date of this Agreement; and
c.           The United States agrees to pay $4.93 million of the Payment Amount
to Relator.
d.           Maximus further agrees to pay Relator $460,000 for
employment-related claims, expenses, attorney’s fees and costs.
e.           The foregoing payments shall be made as follows:

 
 
 

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(i).            Maximus agrees to pay the $30.5 million specified in paragraph
1.b above to the United States by electronic funds transfer pursuant to written
instructions to be provided by Diana Younts, Trial Attorney, United States
Department of Justice. Maximus agrees to make this electronic funds transfer no
later than two business days after the Effective Date of this Agreement.
(ii).            Contingent upon the United States receiving the Payment Amount
specified in paragraph 1.b. above from Maximus and as soon as feasible after
receipt, the United States agrees to pay the $4.93 million specified in
paragraph 1.c. above to the Relator by electronic funds transfer.
(iii).            Maximus agrees to pay the $460,000 specified in paragraph 1.d.
above to Relator by electronic funds transfer to Allred, Bacon, Halfhill & Young
within two business days of the Effective Date of this Agreement.
2.            Subject to the exceptions in Paragraph 5 below, in consideration
of the obligations of Maximus in this Agreement and conditioned upon Maximus’s
full payment of the Payment Amount, the United States (on behalf of itself, its
officers, agents, agencies, and departments) agrees to release Maximus, together
with its current and former parent corporations; each of its direct and indirect
subsidiaries; brother or sister corporations; divisions; current or former
owners, officers, directors, employees and affiliates; and the successors and
assigns of any of them,
 
 
 

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from any civil or administrative monetary claim the United States has or may
have for the Covered Conduct under the False Claims Act, 31 U.S.C. §§ 3729-33;
the Civil Monetary Penalties Law, 42 U.S.C. § 1320a-7a; the Program Fraud Civil
Remedies Act, 31 U.S.C. § § 3801-12; or the common law theories of payment by
mistake, unjust enrichment, and fraud, and any causes of action for which the
Civil Division of the United States Department of Justice has actual and present
authority to assert and compromise pursuant to 28 CFR Part 0, Subpart I, Sec.
0.45(d) for the Covered Conduct. However, because none of the amounts paid
pursuant to this Agreement compensate the United States for civil or
administrative monetary claims the United States might have against CFSA or MAA
for claims for TCM services for Abused and Neglected Children submitted to CMS
by CFSA or MAA based on any of the Conduct delineated in i-vi below, such claims
are excluded from the Covered Conduct, and nothing in this Agreement shall limit
any right of the United States to pursue civil or administrative monetary claims
against CFSA or MAA arising from claims for TCM services where:
i.            no individual case manager was assigned to the recipient;
ii.           the case manager had more than 30 clients;
iii.          the case manager did not have the education and experience
required by the District of Columbia’s Medicaid plan;
iv.          case plans were missing, inadequate or not re-assessed as required
by the District of Columbia’s Medicaid plan;

 
 

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v.           no documentation existed showing that the recipient was abused or
neglected or was at risk of being abused or neglected; or
vi.          costs were included in TCM cost pools that were not related to
providing TCM services for Abused and Neglected Children or were costs that had
also been reimbursed under Title IV-E of the Social Security Act.
3.a.            In consideration of the obligations of Maximus in this
Agreement, conditioned upon Maximus’s full payment of the Payment Amount, and
upon Relator’s receipt of the payment described in Paragraph 1.b and 1.c ,
Relator for himself and for his heirs, successors, attorneys, agents, and
assigns, agrees to release Maximus and its subsidiaries, divisions, affiliates,
partners, and present and former shareholders, officers, directors, employees,
and attorneys from any and all claims asserted and unasserted, known and
unknown, based upon any transaction or incident occurring prior to the Effective
Date of this agreement, including but not limited to from all claims that have
been or could have been asserted in the Civil Action, from any civil monetary
claim the United States has or may have under the False Claims Act, 31 U.S.C. §§
3729-3733, from all claims for the Covered Conduct that is pled in the Civil
Action, and from any claim or demand under 31 U.S.C. § 3730(d) for attorney’s
fees, costs and expenses.
b.            In consideration of the obligations of Maximus in this Agreement,
conditioned upon Maximus’s full payment of the Payment Amount, and upon
Relator’s receipt of the payment described in Paragraph 1.b and 1.c , Relator
for himself and for his heirs, successors, attorneys, agents, and assigns,
agrees to release Maximus and its subsidiaries, divisions, affiliates, partners,
and present and former shareholders, officers, directors, employees, and
attorneys from any and all claims asserted and unasserted, known and unknown,
arising from the employment of the Relator by Maximus or the termination of such
employment including, without limitation, claims under the Age Discrimination in
Employment Act, Title VII of the 1964 Civil Rights Act, the Family Medical Leave
Act, and all other federal, state or local laws prohibiting employment
discrimination, claims for breach of contract, wrongful discharge, personal
injuries or torts, and all claims under any federal, state or local laws
governing employment practices.
 
 
 

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4.            In consideration of the obligations of Maximus in this Agreement
and the Corporate Integrity Agreement (CIA) entered into between OIG-HHS and
Maximus, conditioned upon Maximus’s full payment of the Payment Amount, the
OIG­HHS agrees to release and refrain from instituting, directing, or
maintaining any administrative action seeking exclusion from Medicare, Medicaid,
and other Federal health care programs (as defined in 42 U.S.C. § 1320a-7b(f))
against Maximus under 42 U.S.C.§ 1320a-7a (Civil Monetary Penalties Law) or 42
U.S.C. § 1320a-7(b)(7) (permissive exclusion for fraud, kickbacks, and other
prohibited activities) for the Covered Conduct, except as reserved in Paragraph
5, below, and as reserved in this Paragraph. The OIG-HHS expressly reserves all
rights to comply with any statutory obligations to exclude Maximus from
Medicare, Medicaid, and other Federal health care programs under 42 U.S.C. §
1320a-7(a) (mandatory exclusion) based upon the Covered Conduct. Nothing in this
Paragraph precludes the OIG-HHS from taking action against entities or persons,
or for conduct and practices, for which claims have been reserved in Paragraph 5
below.
 
 
 

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5.            Notwithstanding any term of this Agreement, specifically reserved
and excluded from the scope and terms of this Agreement as to any entity or
person (including Maximus and Relator) are the following claims of the United
States:
a.           Any civil, criminal, or administrative liability arising under
Title 26, U.S. Code (Internal Revenue Code);
b.           Any criminal liability;
c.           Except as explicitly stated in this Agreement, any administrative
liability, including mandatory exclusion from Federal health care programs and
any disallowance action by CMS against the District of Columbia or its Medical
Assistance Administration;
d.           Any liability to the United States (or its agencies) for any
conduct other than the Covered Conduct,
e.           Any liability based upon such obligations as are created by this
Agreement;
f.           Any liability for express or implied warranty claims or other
claims for defective or deficient products or services, including quality of
goods and services;
g.           Any liability for failure to deliver goods or services due; and
h.           Any civil or administrative liability of individuals (including
current or former directors, officers, employees, agents, or shareholders of
Maximus who receive written notification that they are the target of a criminal
investigation (as defined in the United States Attorneys’ Manual), who are
indicted, charged, or convicted, or who enter into a plea agreement, related to
the Covered Conduct.
 
 
 

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6.                      Relator and his heirs, successors, attorneys, agents,
and assigns agree not to object to this Agreement and agree and confirm that
this Agreement is fair, adequate, and reasonable under all the circumstances,
pursuant to 31 U.S.C. § 3730(c)(2)(B) and, conditioned upon receipt of Relator’s
share, Relator, for himself individually, and for his heirs, successors, agents,
and assigns, fully and finally releases, waives, and forever discharges the
United States, its officers, agents, and employees, from any claims arising from
or relating to 31 U.S.C. § 3730; from any claims arising from the filing of the
Civil Action; and from any other claims for a share of the Settlement Amount;
and in full settlement of any claims Relator may have under this Agreement. This
Agreement does not resolve or in any manner affect any claims the United States
has or may have against the Relator arising under Title 26, U.S. Code (Internal
Revenue Code), or any claims arising under this Agreement.
7.                      Maximus waives and shall not assert any defenses Maximus
may have to any criminal prosecution or administrative action relating to the
Covered Conduct that may be based in whole or in part on a contention that,
under the Double Jeopardy Clause in the Fifth Amendment of the Constitution, or
under the Excessive Fines Clause in the Eighth Amendment of the Constitution,
this Agreement bars a remedy sought in such criminal prosecution or
administrative action. Nothing in this Paragraph or any other provision of this
Agreement constitutes an agreement by the United States concerning the
characterization of the Settlement Amount for purposes of the Internal Revenue
laws, Title 26 of the United States Code.
 
 
 

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8.                      Maximus fully and finally releases the United States,
its agencies, employees, servants, and agents from any claims (including
attorney’s fees, costs, and expenses of every kind and however denominated) that
Maximus has asserted, could have asserted, or may assert in the future against
the United States, its agencies, employees, servants, and agents, related to the
Covered Conduct and the United States' investigation and prosecution thereof.
9.                      The Payment Amount shall not be decreased as a result of
the denial of claims for payment by the District of Columbia, its Medical
Assistance Administration or CMS, related to the Covered Conduct; and Maximus,
on behalf of itself or any other entity, shall not resubmit to the District of
Columbia or its Medical Assistance Administration, or cause to be resubmitted to
CMS any previously denied claims related to the Covered Conduct, and shall not
appeal any such denials of claims.
10.                      Maximus agrees to the following:
a.            Unallowable Costs Defined: that all costs (as defined in the
Federal Acquisition Regulation, 48 C.F.R. § 31.205-47; and in Titles XVIII and
XIX of the Social Security Act, 42 U.S.C. §§ 1395-1 395ggg and 1396-1 396v; and
the regulations and official program directives promulgated thereunder) incurred
by or on behalf of Maximus, its present or former officers, directors,
employees, shareholders, and agents in connection with the following shall be
unallowable costs on government contracts and under the Medicare Program,
Medicaid Program, TRICARE Program, and Federal Employees Health Benefits Program
(FEHBP):
 
 
 

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(1)            the matters covered by this Agreement and any related deferred
prosecution agreement;
(2)            the United States’ audit(s) and civil and any criminal
investigation(s) of the matters covered by this Agreement;
(3)            Maximus’s investigation, defense, and corrective actions
undertaken in response to the United States’ audit(s) and civil and any criminal
investigation(s) in connection with the matters covered by this Agreement
(including attorney’s fees);
(4)            the negotiation and performance of this Agreement and any related
deferred prosecution agreement
(5)            the payment Maximus makes to the United States pursuant to this
Agreement and any payments that Maximus may make to Relator, including costs and
attorneys fees; and
(6)            the negotiation of, and obligations undertaken pursuant to the
CIA to:
(i)            retain an independent review organization to perform annual
reviews as described in Section III of the CIA; and
(ii)            prepare and submit reports to the OIG-HHS.
However, nothing in this Paragraph 16.a.(6) that may apply to the obligations
undertaken pursuant to the CIA affects the status of costs that are not
allowable based on any other authority applicable to Maximus.
(All costs described or set forth in this Paragraph 16.a. are hereafter
“unallowable costs.”)
 
 
 

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b.            Future Treatment of Unallowable Costs: These unallowable costs
shall be separately determined and accounted for by Maximus, and Maximus shall
not charge such unallowable costs directly or indirectly to any contracts with
the United States or any State or District of Columbia Medicaid program, or seek
payment for such unallowable costs through any cost report, cost statement,
information statement, or payment request submitted by Maximus or any of its
subsidiaries or affiliates to the Medicare, Medicaid, TRICARE, or FEHBP
Programs.
c.            Treatment of Unallowable Costs Previously Submitted forPayment:
Maximus further agrees that within 90 days of the Effective Date of this
Agreement it shall identify to applicable Medicare and TRICARE fiscal
intermediaries, carriers, and/or contractors, and Medicaid and FEHBP fiscal
agents, any unallowable costs (as defined in this Paragraph) included in
payments previously sought from the United States, or any State or District of
Columbia Medicaid program, including, but not limited to, payments sought in any
cost reports, cost statements, information reports, or payment requests already
submitted by Maximus or any of its subsidiaries or affiliates, and shall
request, and agree, that such cost reports, cost statements, information
reports, or payment requests, even if already settled, be adjusted to account
for the effect of the inclusion of the unallowable costs. Maximus agrees that
the United States, at a minimum, shall be entitled to recoup from Maximus any
overpayment plus applicable interest and penalties as a result of the inclusion
of such unallowable costs on previously-submitted cost reports, information
reports, cost statements, or requests for payment.
 
 
 

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Any payments due after the adjustments have been made shall be paid to the
United States pursuant to the direction of the Department of Justice and/or the
affected agencies. The United States reserves its rights to disagree with any
calculations submitted by Maximus or any of its subsidiaries or affiliates on
the effect of inclusion of unallowable costs (as defined in this Paragraph) on
Maximus or any of its subsidiaries or affiliates’ cost reports, cost statements,
or information reports.
d.            Nothing in this Agreement shall constitute a waiver of the rights
of the United States to audit, examine, or re-examine Maximus’s books and
records to determine that no unallowable costs have been claimed in accordance
with the provisions of this Paragraph.
11.            Maximus agrees to cooperate fully and truthfully with the United
States’ investigation of individuals and entities not released in this
Agreement. Upon reasonable notice, Maximus shall make reasonable efforts to
facilitate access to, and encourage the cooperation of, its directors, officers,
and employees for interviews and testimony, consistent with the rights and
privileges of such individuals, and shall furnish to the United States, upon
reasonable request, all nonprivileged documents and records in its possession,
custody, or control relating to the Covered Conduct.
 
 
 

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12.            This Agreement is intended to be for the benefit of the Parties
only. The Parties do not release any claims against any other person or entity,
except to the extent provided for in Paragraphs 2, 3, and 4 above.
13.            Maximus waives and shall not seek payment on behalf of itself or
any other entity for any of the health care billings covered by this Agreement
from any health care beneficiaries or their parents, sponsors, legally
responsible individuals, or third party payors based upon the claims defined as
Covered Conduct.
14.            Maximus warrants that it has reviewed its financial situation and
that it currently is solvent within the meaning of 11 U.S.C. § § 547(b)(3) and
548(a)(1 )(B)(ii)(I), and shall remain solvent following payment to the United
States of the Payment Amount. Further, the Parties warrant that, in evaluating
whether to execute this Agreement, they (a) have intended that the mutual
promises, covenants, and obligations set forth constitute a contemporaneous
exchange for new value given to Maximus, within the meaning of 11 U.S.C. §
547(c)(1); and (b) conclude that these mutual promises, covenants, and
obligations do, in fact, constitute such a contemporaneous exchange. Further,
the Parties warrant that the mutual promises, covenants, and obligations set
forth herein are intended to and do, in fact, represent a reasonably equivalent
exchange of value that is not intended to hinder, delay, or defraud any entity
to which Maximus was or became indebted to on or after the date of this
transfer, within the meaning of 11 U.S.C. § 548(a)(1).

 
 
 

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15.            Except as expressly provided to the contrary in this Agreement,
each Party shall bear its own legal and other costs incurred in connection with
this matter, including the preparation and performance of this Agreement.
16.            Maximus represents that this Agreement is freely and voluntarily
entered into without any degree of duress or compulsion whatsoever.
17.            Relator represents that this Agreement is freely and voluntarily
entered into without any degree of duress or compulsion whatsoever.
18.            This Agreement is governed by the laws of the United States. The
Parties agree that the exclusive jurisdiction and venue for any dispute arising
between and among the Parties under this Agreement is the United States District
Court for the District of Columbia, except that disputes arising under the CIA
shall be resolved exclusively under the dispute resolution provisions in the
CIA.
19.            This Agreement constitutes the complete agreement between the
Parties. This Agreement may not be amended except by written consent of the
Parties.
20.            Upon receipt of the payment described in Paragraph 1.a -1 .c..
above, the United States shall file a Notice of Intervention, and Relator and
the United States shall promptly sign and file in the Civil Action a Joint
Stipulation of Dismissal with prejudice of the United States’ and Relator’s
claims contained in the Civil Action pursuant to the terms of the Agreement.
20.            The individuals signing this Agreement on behalf of Maximus
represent and warrant that they are authorized by Maximus to execute this
Agreement. The individual(s) signing this Agreement on behalf of Relator
represent and warrant that she is authorized by Relator to execute this
Agreement. The United States signatories represent that they are signing this
Agreement in their official capacities and that they are authorized to execute
this Agreement.
 
 
 

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21.            This Agreement may be executed in counterparts, each of which
constitutes an original and all of which constitute one and the same Agreement.
22.            This Agreement is binding on Maximus’s successors, transferees,
heirs, and assigns.
23.            This Agreement is binding on Relator’s successors, transferees,
heirs, and assigns.
24.            All Parties consent to the United States’ disclosure of this
Agreement, and information about this Agreement, to the public.
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25.           This Agreement is effective on the. date of signature of the last
signatory to the Agreement (Effective Date of this Agreement). Facsimiles of
signatures shall constitute acceptable, binding signatures for purposes of this
Agreement.
 
THE UNITED STATES OF AMERICA
 
 

DATED: 7/20/07  
BY:
/s/ Diana J. Younts        
Diana J. Younts
Trial Attorney
Commercial Litigation Branch
Civil Division
United States Department of Justice
            DATED: 7/20/07  
BY:
/s/ Laurie Weinstein        
Laurie Weinstein
Assistant United States Attorney
United States Attorney's Office for the
District of Columbia
            DATED: 7/20/07  
BY:
/s/ Gregory E. Demske        
Gregory E. Demske
Assistant Inspector General for Legal Affairs
Office of Counsel to the Inspector General
Office of Inspector General
United States Department of Health
and Human Services
 

 
 
 

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MAXIMUS
 
 

DATED: July 20, 2007  
BY:
/s/ David R. Francis        
David R. Francis
General Counsel and Secretary
Maximus
            DATED: July 20, 2007  
BY:
/s/ Laurence J. Freedman        
Laurence J. Freedman, Esq.
Counsel for Maximus
 

 
RELATOR

 

          DATED: 7-19-07  
BY:
/s/ Benjamin Turner        
Benjamin Turner
            DATED: 7/19/07  
BY:
/s/ Warner Young III        
Warner Young, III, Esq.
Allred, Bacon, Halfhill & Young
Counsel for Benjamin Turner