N. CAROLINA TO PAY $23.8M TO RESOLVE OVERBILLING ALLEGATIONS FOR STATE’S FOSTER CARE & CHILDCARE SERVICES

WASHINGTON, D.C. - North Carolina has agreed to pay the United States $23.8 million to resolve multiple allegations of False Claims Act violations, as well as administrative violations, concerning federal funding of the state’s foster care and childcare services, the Justice Department announced today.

North Carolina has agreed to resolve allegations that the State Division of Mental Health, Developmental Disabilities and Substance Abuse knowingly billed the federal government for costs that were ineligible for federal foster care training funds. The settlement agreement also resolves allegations outlined in reports by the U.S. Department of Health and Human Services’ Office of Inspector General that North Carolina committed administrative violations by failing to document its actual costs spent on day care services.

"The Department of Justice is committed to preventing the fraud, waste and abuse of taxpayer dollars and ensuring recovery of funds intended to benefit our nation's children," said Peter D. Keisler, Assistant Attorney General for the Civil Division.

According to the terms of the settlement agreement, the state has agreed to make cash payments totaling $20 million, agreed to a disallowance of federal funding in the amount of $3.8 million and agreed to implement a new record-keeping system for identifying child care expenditures.

In 2002, the U.S. Attorney’s Office for the Eastern District of North Carolina criminally prosecuted Dr. Lenore Behar, the former Chief of the Child and Family Section of the Division of Mental Health. Behar was indicted for her role in mischarging foster care training funds and was subsequently convicted of obstruction of justice.

“Today’s settlement resolves every foster care training claim submitted by the Division of Mental Health during the tenure of Lenore Behar,” said Frank D. Whitney, U.S. Attorney for the Eastern District of North Carolina in Raleigh. Whitney applauded the settlement for “recovering funds meant to help North Carolina’s children, that were instead spent on things like international travel, the renovation of a college building in another country, and the construction of a statue of a foreign leader.”

Attorneys of the Justice Department’s Civil Division and U.S. Attorney’s Office for the Eastern District of North Carolina, with assistance from the U.S. Department of Health and Human Services’ Office of General Counsel, negotiated this civil matter.

The Federal Bureau of Investigation, U.S. Department of Defense Criminal Investigative Service, U.S. Department of Health and Human Services’ Office of Inspector General and the Defense Contract Audit Agency also provided investigative support.

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