The former CFO of Hacienda Healthcare Inc. will be back in a Maricopa County courtroom next week for a pretrial hearing involving an alleged years-long criminal scheme that defrauded Arizona taxpayers and led the company to agree to pay more than $11 million to the state.
Joseph O’Malley is charged with felony illegal control of an enterprise and felony fraudulent schemes stemming from an alleged “elaborate fraud” involving misallocation of funds from Arizona Health Care Cost Containment System (AHCCCS) and another state agency. He will appear before Judge Timothy Ryan on Sept. 24 in advance of a jury trial to be presided over by Ryan next year.
According to Arizona Attorney General Mark Brnovich, the schemes involved improper billing practices and the intentional inflating of costs for services from 2013 to 2018. The board of directors of Hacienda agreed in August 2020 to repay nearly $10.9 million in overpayments and a $1 million fine which will be allocated between the AHCCCS Inspector General and the Attorney General’s Office.
The company’s repayment agreement ensures no criminal or civil action will be pursued against Hacienda or any of its other former corporate officers unless the company defaults on the plan.
A spokesperson for Brnovich’s office confirmed to Arizona Daily Independent that Hacienda has fulfilled its promise of a $7 million lumpsum repayment followed by $50,000 in monthly payments until the balance is paid in full. Those monthly payments are current, the attorney general’s office said.
O’Malley’s co-defendant, former Hacienda CEO William J. Timmons, pleaded guilty in June to two felonies for his admitted role in the billing scheme. He is scheduled to be sentenced by Ryan on Nov. 19
Timmons, 74, could be placed on probation or be ordered to serve a state prison of 3 to 12.5 years. His plea deal includes a promise to personally remit $500,000 in restitution to AHCCCS and $274,500 in fines to the Arizona Attorney General’s anti-racketeering revolving fund.