Former Hacienda Healthcare CEO avoids prison time in fraud case

PHOENIX – The former CEO of the Phoenix health care facility where an incapacitated resident was impregnated by a nurse avoided time behind bars in an unrelated fraud case, authorities said Friday.

A Maricopa County Superior Court judge sentenced former Hacienda Healthcare leader William J. Timmons to three years of supervised probation, the Arizona Attorney General’s Office announced.

In June, Timmons pleaded guilty to two counts of felony fraud and faced up to 12.5 years in prison on each count.

He was previously ordered to pay $500,000 in restitution to the Arizona Health Care Cost Containment System and $274,500 to the Attorney General’s Anti-Racketeering Revolving Fund as part of his plea deal.

A state grand jury indicted Timmons and his chief financial officer, Joseph O’Malley, in August 2020.

The two were accused of being involved in what prosecutors said was an elaborate white-collar fraud scheme that bilked Arizona taxpayers out of millions of dollars.

According to the indictment, Timmons and O’Malley “misallocated” money from the state from 2013 until June 30, 2018, by manipulating costs to avoid repayments of state funds in favor of inflated salaries and bonuses.

The case against O’Malley is ongoing.

Hacienda settled a related civil case last year by agreeing pay more than $11 million in restitution and penalties.

Hacienda Healthcare was in the headlines several years ago after an incapacitated woman gave birth and a nurse at the long-term care facility was accused of raping her.

Timmons resigned shortly after police said they were investigating.

Nathan Sutherland pleaded guilty to sexual abuse and abuse of a vulnerable adult in September and awaits sentencing.

Sutherland was arrested January 2019, almost a month after the pregnancy was discovered when a Hacienda employee was changing the garments of the victim and noticed the patient was in the process of delivering a child. Employees told police that they had no idea the woman was pregnant.

Sutherland, a licensed practical nurse at the time, initially pleaded not guilty. He was fired by Hacienda after his arrest and has since given up his nursing license.

Police have said Sutherland’s DNA matched a sample taken from the woman’s son. The victim’s mother is the boy’s guardian.

The case triggered reviews by state agencies and highlighted safety concerns for patients who are severely disabled or incapacitated.

The Associated Press contributed to this report.

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