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Thu Oct 31, 2019, 04:05 PM

Outcome Health Agrees to Pay $70 Million to Resolve Fraud Investigation


Department of Justice
U.S. Attorney’s Office
Northern District of Illinois

Wednesday, October 30, 2019

Outcome Health Agrees to Pay $70 Million to Resolve Fraud Investigation

WASHINGTON – ContextMedia Health LLC, which operates under the trade name Outcome Health (Outcome), a digital provider of medical information and advertising in doctors’ offices, has agreed to a resolution with the Department of Justice by which it will pay $70 million to victims of a fraud scheme that targeted its clients, lenders and investors.

Outcome, a privately held company headquartered in Chicago, Illinois, admitted in resolution documents that from 2012 to 2017, former executives and employees of the company perpetrated a scheme to defraud clients — most of which were pharmaceutical companies — by selling advertising inventory that the company did not have.

Outcome admitted that as a result of its practice of selling clients inventory it did not have, it under-delivered on its advertising campaigns. Despite these under-deliveries, the company still invoiced its clients as if it had delivered in full. To conceal the under-deliveries, Outcome employees at the time falsified affidavits and proofs of performance to make it appear the company was delivering advertising content to the number of screens in its clients’ contracts. Outcome executives and employees during that time also inflated patient engagement metrics regarding how frequently patients engaged with Outcome’s devices. Furthermore, an executive at the time altered a number of studies presented to clients to make it appear that the campaigns were more effective than they actually were, Outcome admitted.

Outcome further admitted that its under-delivery on advertising campaigns resulted in a material overstatement of revenue for the years 2015 and 2016. The company’s outside auditor signed off on the 2015 and 2016 revenue numbers because executives and employees at the time fabricated data to conceal the under-deliveries from the auditor. Outcome used the inflated revenue figures in its 2015 and 2016 audited financial statements to raise $110 million in debt financing in April 2016, $375 million in debt financing in December 2016, and $487.5 million in equity financing in early 2017, it admitted.

The Department and Outcome entered into a non-prosecution agreement (NPA) to resolve this matter. Outcome’s obligations under the agreement will have a term of three years, unless the term is modified by the government. Under the terms of the NPA, Outcome and its current parent company, Outcome Health LLC (Outcome Parent), committed to compensating the pharmaceutical client victims in the amount of $70 million, approximately $65.5 million of which has already been made through a combination of cash payments and in-kind services, and to set aside an additional $4.5 million to compensate any additional pharmaceutical clients who have not yet been made whole. The NPA does not require Outcome and Outcome Parent to provide compensation to lenders and investors who were victims of Outcome’s scheme, however, because many of those lenders and investors are now the companies’ new owners. Under the terms of the NPA, Outcome and Outcome Parent also agreed to cooperate with the government’s ongoing investigation of individuals, to report evidence or allegations of U.S. federal law to the Department, and to enhance their existing compliance program and internal controls, where necessary and appropriate, to ensure they are designed to detect and deter violations of U.S. federal law.

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