BOSTON — In the largest settlement of its kind, a private equity firm and former executives from South Bay Mental Health Center, Inc. (SBMHC) have agreed to pay $25 million for allegedly filing false claims to MassHealth and providing mental-health services from unqualified and unlicensed staff members.
SBMHC has operated mental-health facilities across the state, including in Lynn, Salem, Attleboro, Brockton, Cape Cod, Chelsea, Dorchester, Fall River, Lawrence, Leominster, Lowell, Malden, Pittsfield, Plymouth, Springfield, Weymouth, and Worcester.
The facilities are supposed to provide services to help with adult behavioral health, substance-abuse counseling, children’s behavioral health, autism services, and early childhood services.
“It’s vital that people who need mental-health services receive treatment from qualified individuals,” said Attorney General Maura Healey. “We took action against these defendants for leaving thousands of MassHealth patients with unlicensed and unsupervised care, while MassHealth paid millions of dollars for fraudulent services. We will go after bad actors who jeopardize people’s health and well-being to make a profit.”
Healey first brought the lawsuit in 2018 due to a whistleblower who worked for the company. The lawsuit names Peter J. Scanlon, the founder, owner and CEO of SBMHC until April 2012; H.I.G. Growth Partners, LLC and H.I.G. Capital, which created Community Intervention Services (CIS) to buy SBMHC from Scanlon; and Kevin P. Sheehan, the CEO of CIS.
Healey’s office investigated the claims made by the whistleblower, and found that SBMHC had a pattern of employing unlicensed, unqualified, and unsupervised staff at its mental-health facilities in violation of MassHealth regulations.
HIG, Scanlon, and Sheehan tried to have allegations dismissed against them in May of this year, but the court denied their attempt. According to the settlement, HIG will pay $19.95 million, while Scanlon and Sheehan will pay the remaining $5.05 million.
