Maranatha Human Services Inc., a Poughkeepsie nonprofit that provides housing and rehabilitation services to people with developmental disabilities, has agreed to pay New York and the federal government at least $850,000 for Medicaid fraud and then shut down operations.
U.S. District Court Judge Kenneth M. Karas approved state and federal settlements on Aug. 31. The lawsuit was filed as a whistleblower case four years ago and kept secret until last November, when the founder, Henry Alfonso Coley, agreed to pay back $220,000 in ill-gotten gains to the state and feds.
Coley founded Maranatha in 1988 as a non-profit corporation and funded it almost entirely with Medicaid payments.
The whistleblower, former chief operating officer Stephanie Munford, accused Coley of using Medicaid funds to pay for pet projects, low-show or no-show jobs, personal expenses, and consulting contracts to himself and his family and his friends.
Maranatha and Coley had agreed that $2.4 million in Medicaid funds were diverted but the governments agreed to accept less, according to the state settlement, because the organization “lacks the assets and ability to make full financial restitution.”
Maranatha agreed to pay $510,000 to New York State and $340,000 to the federal government within 30 days.
Last year, Coley agreed to pay the state $132,000 and the feds $88,000. He was barred from working for any entity that receives Medicaid funds and from serving as an officer or fundraiser for New York charities.
Total restitution amounts to $1,070,000, or 45% of the diverted Medicaid funds.
But the governments might be able to get more from any real estate interests that Maranatha sells. The organization has offices, residences for individuals with developmental disabilities, and rehab programs in Poughkeepsie, Stone Ridge and Woodstock in Ulster County, and five locations in Queens.
Maranatha would have to pay 60% of any real estate profits to the state and 40% to the federal government.
Maranatha also agreed to stop submitting new claims for health care funds by the end of June 2023, shift its programs to other providers, and then cease operations and dissolve the organization.
The feds agreed to pay Munford $94,160 from the monies collected from Coley and Maranatha, plus 22% of any real estate profits.
The whistleblower case was filed in 2018 under the federal False Claims Act. The state Attorney’s General’s Medicaid Fraud Control Unit intervened last year under a similar state law.
