Company with $1.2 billion Obamacare contract under investigation for ‘serious fraud’
A British multinational being paid $1.2 billion to implement Obamacare’s federal insurance exchanges is under investigation after allegedly overcharging the British government by tens of millions of dollars.
Reuters reports that Britain’s Serious Fraud Office is now looking into Serco, a massive service and security firm employing 120,000 worldwide, after the company reportedly overbilled its government client as much as $80 million for criminal electronic monitoring devices.
Around one in six of the criminals listed were already in prison, had left the country, were not required to wear a device, or were even dead.
The alleged fraud prompted an audit from the U.K.’s Ministry of Justice earlier this summer. Late last week, the ministry sent information from that audit to the Serious Fraud Office, asking that it consider a criminal case against the company.
In early July, the U.S. Department of Health and Human Services (HHS) granted Serco a $1.25 billion contract to review and process paper insurance applications for Obamacare’s 34 federally-operated state exchanges. News of the investigation broke days later, and the Obama administration rushed to defend its corporate partner.
“Serco is a highly-skilled company that has a proven track record in providing cost-effective services to numerous other federal agencies,” said a spokesman for HHS’ Centers for Medicare and Medicaid Services, the agency charged with implementing the exchanges.
“The selection met all of the requirements for a full and open competition,” he continued, “and the timing enables us to be ready for marketplace open enrollment starting on October 1.”
Alan Hill, the spokesman for Serco’s American subsidiary, told The Washington Post in July that a “firewall” existed between the American and British wings of the company. “When a foreign entity is involved, I think that means that U.S. interests are protected,” he said.
The firm has already hired hundreds of new employees to fill Obamacare processing centers in Missouri, Arkansas and Kentucky. The Missouri office alone filled 600 new jobs in the last week in preparation for the individual exchange roll-out scheduled for Tuesday.
Serco already handles processing and records management for many U.S. agencies, including the Patent and Trademark Office and portions of the Department of Homeland Security. But this is their first foray into health care, at least in the United States.
In Britain, Serco operates off-hour general care clinics for the state-run National Health Service. Last September, The Guardian revealed that the company had presented false data on the performance of these clinics 252 separate times.
“To falsify returns once is once too many,” a former Conservative health secretary said at the time. “To falsify 252 times represents a pattern of behavior which should lead to a full review.”
All of Serco’s British contracts are currently under review. In a statement released last Thursday, the company claimed it had properly billed the U.K. government for the monitoring devices and pledged to continue cooperating fully with the Ministry of Justice.
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