Posts Tagged ‘‘Operation Lightning Rod’’

From 2012: Fraud and Failure in Maximus, American Work Programme Contractors

April 9, 2014

This comes from Private Eye for the 29th June – 12th July 2012, and concerns the history of failure and corruption in Maximus, an American company that IDS awarded a contract for running the Work Programme.

Welfare to Work

Dirty Max

It’s probably just as well hardly anyone in the UK has heard of welfare-to-work firm Maximus, which has government contracts worth £176m to run Iain Duncan Smith’s Work Programme in west London and the South-east. In the US its record includes fraud and failure on a grand scale.

In 2007 Maximus was fined $30.5m over accusations that it cheated Medicaid, the US equivalent of the NHS, by making tens of thousands of false claims on a “payment by results” contract.

Washington State had hired the firm to help it make savings, both sharing money claimed from the national Medicaid system for children in foster care. But Maximus, in a plan called “Operation Lightning Rod”, increased its income by making claims for children who had not received care.

After the fraud was exposed Maximus said it would not sign any more “contingency-based contracts” where it was paid from “savings” in state expenditure. But the UK’s Work Programme is just such a contingency-based, payment-by-results contract.

In 2007 Maximus was also sued by Connecticut for the “abject failure” of its computer system which was supposed to run a police database, including real-time police record checks. The state’s attorney-general said: “Maximus minimized quality – squandering millions of taxpayer dollars and shortchanging law enforcement agencies.” He said the database could “make a life and death difference to police and other law enforcers”, so the failure was unacceptable. In 2010 Maximus settled the case for $2.5m.

In the same year the firm recorded losses of $37m after its work with Accenture for Texas collapsed. It was main subcontractor on a scheme to run the state’s health benefits; but after 5,000 benefit clerks were made redundant, the replacement databases and call centres, failed, families were arbitrarily cut off from benefits and Texas lost millions in national funds.

So, like A4E, another company with a history of failure and corruption was awarded the government contract to handle the Work Programme.