September 16, 2026

The Attorney General’s Office today announced that it has reached a settlement with Health Care & Rehabilitation Services of Southeastern Vermont (HCRS), resolving allegations that the designated agency improperly retained Vermont Medicaid funds it should have returned to the State. The settlement follows an investigation conducted by the Attorney General’s Medicaid Fraud and Residential Abuse Unit (MFRAU) and requires HCRS to pay $391,816 to the State and undertake specific compliance measures going forward.  

“When health care agencies entrusted with Vermont Medicaid funds abuse the system, the consequences ultimately come at the expense of patients and taxpayers,” Attorney General Clark said. “I am grateful to the parties for entering into an agreement that accounts for the harms of their actions and ensures this does not happen again.”

MFRAU’s investigation of HCRS began following a referral from the Department of Aging and Independent Living (DAIL), and revealed that, over a three-year period, HCRS misused and retained Medicaid funds that should have been returned to the State. Specifically, HCRS improperly kept Medicaid funds that were not used for their original budgeted purpose and, in certain cases, retained Medicaid funds for clients who had terminated their services. 

Unused funds should have been returned to the State’s Equity/Public Safety fund to be reallocated as needed to Medicaid beneficiaries. MFRAU also found that, on numerous occasions, HCRS made significant changes to a client’s budget or services without adequately documenting that the services were medically necessary and failed to provide required adverse benefit notifications and suspension notices to numerous clients.

If you suspect Medicaid fraud, please submit a report using MFRAU’s online reporting form.

The Medicaid Fraud and Residential Abuse Unit receives 75 percent of its funding from the U.S. Department of Health and Human Services under a grant award totaling $1,497,780 for Federal fiscal year FY 2026. The remaining 25 percent, totaling $499,260 for FY 2026, is funded by the State of Vermont.

Contact: Haley Sommer, Senior Advisor to the Attorney General, 802-828-3171