POCATELLO, Idaho (AP) — A former state judge appointed to oversee a financial fraud case has cleared a mental health provider of wrongdoing and restored the clinic's status as a Medicaid provider.

The decision was made Tuesday by former state judge Peter D. McDermott, who was appointed to serve as an administrative hearing officer in a case against Seasons of Hope, which operates clinics across southern and eastern Idaho.

The Chubbuck-based provider lost its Medicaid payments earlier this year after an 18-month investigation by the Idaho Department of Health and Welfare. Investigators accused the company of billing for services not covered, misrepresenting services and billing for services that were not documented, leading the agency to revoke its Medicaid provider status.

State officials were also demanding Seasons of Hope to repay $439,000 in overpayments and pay a $110,000 civil penalty.

Seasons of Hope administrators appealed, but only after laying off about 100 employees and closing clinics.

On Tuesday, McDermott sided with the clinic, determining that its administrators made mistakes but did not intentionally seek to defraud the state and the Medicaid program.

"Making errors is not fraud," McDermott wrote. "Fraud requires an intentional act. There is no proof that Seasons of Hope committed fraud."

McDermott also ruled the agency's Medicaid Program Integrity Unit placed too much emphasis during the investigation on the testimony of disgruntled former employees of the clinics.

The judge did hold the clinic responsible for the inappropriate billing. McDermott dismissed counter claims of fraud alleged by Seasons of Hope and ordered the clinic to repay the state agency more than $94,000 along with penalties and fines.

Seasons of Hope CEO Heath Sommer said the decision paves the way for him to rehire staff and reopen branches.

"Having received the news of the vindication of my staff, my agency and myself has been a blessing of great magnitude," Sommer said in a statement issued Tuesday. "Still, we are trying to process how a branch of the government we all pay for chose to shut down a viable business rather than make a few simple, inquiring phone calls that could have saved so many jobs and continued needed services for hundreds of patients."

Health and Welfare Spokesman Tom Shanahan said Wednesday that agency attorneys are still reviewing the decision.

Both parties have 14 days to appeal the decision.


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