Obamacare contractor under investigation in Britain

July 15, 2013

The British government has launched an investigation of Serco Group, parent company of the firm recently awarded $1.2 billion to manage key elements of the U.S. health-care law’s rollout.

(Photo by Jessica Rinaldi/Reuters)
(Photo by Jessica Rinaldi/Reuters)

That contract, announced in late June, is among the largest Affordable Care Act grants made so far, expected to cover the hiring of 1,500 workers who will process a wave of health coverage applications.

In the United Kingdom, Serco Group reportedly overbilled the government by “tens of millions of pounds” under a contract to monitor offenders on parole and individuals released on bail, according to an audit conducted by the country’s Justice Ministry.

The British government plans to review all of its contracts with the U.K.-based firm and put on hold a separate contract Serco had secured with the country’s prison system.

“They do not believe that anything dishonest has taken place,” Chris Grayling, the British justice minister, told Parliament regarding Serco. “But we have agreed that if the audit does show dishonest action, we will jointly call in the relevant authorities to address it.”

The audit will not affect Serco Inc., the Reston-based branch of the global firm that won the health-law contract, according to spokesman Alan Hill. The global Serco Group has said it will comply with the British investigation.

“We’re moving forward with the contract,” Hill said. “We’ve got a tight deadline to get everybody trained and do all the testing.”

Hill said there is a “firewall” between the American arm of the company, which often handles sensitive government information, and its overseas parent. “When a foreign entity is involved, I think that means that U.S. interests are protected,” he said.

Serco’s $1.2 billion contract with the Center for Medicare and Medicaid Services is the firm’s first health law award, Hill said. The company does, however, have experience handling large U.S. government jobs through contracts with the State Department to process visa applications and with the U.S. Patent and Trademark Office, where it oversees patent requests.

Serco has already begun recruiting workers for offices that will be in Arkansas, Alabama and Kentucky. Workers will handle applications for health coverage that come in through the state insurance marketplaces, which launch Oct. 1.

“Serco is a highly skilled company that has a proven track record in providing cost-effective services to numerous other federal agencies,” Medicare spokesman Brian Cook said. “The company has provided exceptional records management and processing support to other federal agencies, similar to work they will do for the marketplace.”

The British investigation centers on Serco and another contractor, G4S, which provide the prison system with services to track individuals outside correctional facilities.

An audit found the two companies to have charged the British government “for people who were back in prison and had had their tags removed, people who had left the country, and those who had never been tagged in the first place but who had instead been returned to court,” Justice Secretary Chris Grayling told the British Parliament.

In a small number of cases, he said, the companies continued charging the government for its monitoring services after the individual had died.

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