Operator of South Carolina Medicaid Call Center Agrees to Pay $11.3 Million to Resolve False Claims Act Liability; Two Former Employees Plead Guilty to Wire Fraud

COLUMBIA, S.C. -Conduent State Healthcare, LLC, headquartered in New Jersey, has agreed to pay $11,358,767 to resolve False Claims Act allegations arising from Conduent's fraudulent reporting of call center performance metrics and false claims for payment to the South Carolina Department of Health and Human Services (SCDHHS).

Two former employees of Conduent, Richard Kirchner, 71, of Branchburg, N.J., and Brian Devanney, 66, of Lexington, S.C., pleaded guilty for their role in fabricating performance metrics and adjusting invoices to SCDHHS. In connection with the settlement, the United States acknowledged that Conduent took significant steps in cooperating with the government's investigation, entitling it to credit.

Since 2016, Conduent has been operating the South Carolina Medicaid Member Contact Center ("call center"), which takes calls from South Carolina Medicaid recipients to resolve these individuals' questions, requests, or concerns. Conduent's contract with SCDHHS was performance-based and used a tiered payment structure, with Conduent receiving higher payments as completed call center contacts increased, and receiving penalties if certain metrics were not met.

Between Jan. 1, 2018, and Feb. 28, 2023, Kirchner and Devanney supplied fake reports to SCDHHS with inflated numbers for call volumes and misrepresented metrics to avoid penalties under the contract. SCDHHS paid Conduent an excess of $8,113,405 as a result of the fraudulent reports and invoices submitted by Devanney and Kirchner. Those payments benefitted Conduent.

On June 8, 2023, Conduent self-disclosed this conduct to the United States Attorney's Office. Conduent took remedial measures, which included promptly disclosing the problem to SCDHHS within days of discovering the conduct, communicating to SCDHHS its plan for completing a more extensive investigation, suspending monthly invoices to SCDHHS until a loss amount was determined, immediately terminating Kirchner and Devanney and others, engaging independent outside forensic examiners to audit call center reports and quantify damages, returning to SCDHHS the money fraudulently received, gathering evidence and producing that evidence to the United States Attorney's Office, and cooperating with the United States' subsequent investigation.

"Protecting taxpayer dollars from such fraud and abuse is an important part of our work," said Adair F. Boroughs, U.S. Attorney for the District of South Carolina. "This settlement highlights the importance of integrity in government contracting, the benefits of voluntary self-disclosure, and our commitment to protecting government healthcare programs."

"Individuals who exploit government healthcare programs like Medicaid divert valuable taxpayer dollars from their intended use," said Kelly J. Blackmon, Special Agent in Charge of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG). "HHS-OIG's Self-Disclosure Protocol enables providers to voluntarily report potential violations of the False Claims Act, assisting us in identifying, investigating, and addressing Medicare and Medicaid fraud."

"There is always an opportunity for businesses to do the right thing, and doing the right thing is especially important in the healthcare context," said Attorney General Alan Wilson. "Our office has numerous men and women who work every day to ensure the Medicaid program in South Carolina functions properly; and sometimes our most important allies are those in the industry who identify when something has gone wrong and step forward."

Under the False Claims Act, the United States is entitled to three times the amount of actual damages plus penalties of between $13,946 and $27,894 per false claim. Damages and penalties in this case could have resulted in a judgment of up to $26,069,643. Given Conduent's voluntary disclosure and remedial actions, it resolved this case for $11,358,767.

The resolution obtained in this matter was the result of a coordinated effort between the U.S. Attorney's Office for the District of South Carolina, the Department of Health and Human Services' Office of Inspector General, and the South Carolina Attorney General's Vulnerable Adult and Medicaid Provider Fraud Control Unit (VAMPF).

Kirchner and Devanney are awaiting sentencing for their criminal charges.

Assistant U.S. Attorneys Beth Warren and Nancy Cote handled the civil matter for the United States. Assistant U.S. Attorneys Lothrop Morris and Scott Matthews are prosecuting the criminal matters for the United States.

The claims resolved by the civil settlement are allegations only and there has been no determination of liability. The South Carolina Medicaid Fraud Control Unit, dba VAMPF, receives 75 percent of its funding from the U.S. Department of Health and Human Services under a grant award totaling $2,889,252 for federal fiscal year 2025. The remaining 25 percent, totaling $963,084 for FFY 2025, is funded by South Carolina.

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