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    Mental health care company accused of Medicaid fraud to pay $4 million in settlement

    A mental health care company accused of fraudulently billing the Massachusetts Medicaid program has agreed to pay $4 million in a settlement with Attorney General Maura Healey’s office.

    South Bay Community Services (formerly known as South Bay Mental Health) allegedly used unlicensed, unqualified, and unsupervised workers to treat patients. Healey sued the company in January, joining a whistle-blower’s lawsuit that raised similar allegations.

    South Bay’s patients included poor and low-income people on MassHealth, the state’s Medicaid program. The company operates mental health facilities in many Massachusetts locations, including Brockton, Boston, Worcester, Springfield, Lawrence, Fall River, and Cape Cod.

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    “Thousands of MassHealth patients were left with inadequate care at these mental health facilities, while we allege this company fraudulently billed the state,” Healey said in a statement.

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    “This settlement will bring critical funds back to our MassHealth program and ensure that members receive treatment from qualified individuals. Companies that receive payments from taxpayer-funded programs must be held accountable when they abuse this system.”

    Healey’s office said last month that since August 2009, the state paid South Bay more than $123 million for providing mental health counseling and other services to MassHealth patients and said “a significant portion” of that sum was based on fraudulent claims.

    As part of the settlement, South Bay agreed to implement a program to ensure that it is complying with licensure and supervision requirements for its staff. The company also must submit to annual on-site audits.

    “South Bay is confident that we are in compliance with legal requirements,” the company said in a statement. “We are pleased this matter has been resolved and look forward to continuing to provide quality services to those in need.”

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    Lawsuits are still pending against other defendants in the case, including two former South Bay executives and H.I.G. Capital, a global private equity firm whose subsidiaries own the Brockton-based mental health company.

    Healey’s office alleged that 17 South Bay clinics employed therapists who were unqualified and unsupervised. Many employees did not have degrees in social work and therefore were not eligible for the appropriate license, according to Healey’s office. Instead, the workers allegedly held degrees in expressive therapy, art therapy, creative arts therapy, school counseling, and other fields.

    The company’s Attleboro clinic had 125 employees and only two licensed supervisors, the attorney general alleged.

    The whistle-blower who filed the initial lawsuit against the company, Christine Martino-Fleming, will receive $700,000 through the settlement. The rest of the payment will go to MassHealth.

    Martino-Fleming formerly worked for South Bay as a job coach and coordinator of staff development and training. According to her lawyer, Jeffrey A. Newman of Marblehead, she sent e-mails notifying superiors of the problems she witnessed at South Bay, but the company did nothing to address them.

    Priyanka Dayal McCluskey
    can be reached at priyanka.mccluskey@globe.com. Follow her on Twitter @priyanka_dayal.