Preferred Family Healthcare Lawsuit: Convictions and $8M Settlement

The Preferred Family Healthcare lawsuit and criminal enforcement effort dismantled one of the largest public corruption schemes in Arkansas history. Between roughly 2011 and 2017, executives at the Springfield, Missouri nonprofit embezzled millions from the charity, funneled the money to Arkansas legislators in exchange for favorable action, and billed Medicaid for counseling that was never delivered. The fallout produced more than a dozen criminal convictions, over $14.5 million in combined settlements and forfeitures, and the end of PFH’s operations in Arkansas.¹

What the Scheme Actually Did

Two frauds ran in parallel. On the bribery side, PFH lobbyist and executive Milton Russell “Rusty” Cranford and former executive Robin Raveendran set up a front called the “Alliance for Health Care” to disguise payments to then-State Senator Jeremy Hutchinson as attorney’s fees and legal retainers.²³⁴⁵

On the Medicaid side, PFH therapists billed the Arkansas Medicaid Program millions of dollars for counseling services that were never provided to mentally ill patients. The organization also billed Medicaid for services rendered to Qualified Medicare Beneficiaries, charges that should have been submitted to Medicare instead.⁵

How the Fraud Came to Light

The Medicaid piece surfaced through whistleblowers. One tipped off the Arkansas Attorney General’s Medicaid Fraud Control Unit in 2016 about the phantom counseling billings, and a second informant came forward in 2017 about the improper billing of Qualified Medicare Beneficiaries.⁶ The bribery side unspooled through a parallel federal investigation that eventually reached executives in Springfield and legislators in Little Rock.

Criminal Convictions of PFH Executives

Former chief financial officer Tommy “Tom” Ray Goss pleaded guilty to conspiracy to pay bribes and kickbacks, embezzlement, and aiding in the preparation of a false tax return. He was sentenced in April 2024 to six years in federal prison, and he and his wife were jointly ordered to pay $4.35 million in forfeiture and restitution.⁷ Former chief operating officer Bontiea Bernedette Goss pleaded guilty to conspiracy to pay bribes and kickbacks and was sentenced the same month to three years.⁴

Rusty Cranford, who ran operations and lobbying in Arkansas, was convicted of federal program bribery and sentenced to seven years in federal prison.¹ Former chief executive officer Marilyn Luann Nolan pleaded guilty in November 2018 to conspiracy to embezzle and misapply charitable organization funds. Robin Raveendran pleaded guilty in June 2019 to conspiracy to commit bribery concerning programs receiving federal funds and was sentenced to five years of probation with $25,000 in restitution.⁸ Keith Fraser Noble, former head of clinical operations, pleaded guilty in September 2019 to concealment of a known felony.⁴

Convictions of Arkansas Lawmakers

Jon Woods drew the heaviest sentence. A jury found him guilty on 15 counts including conspiracy to commit honest services fraud, wire fraud, mail fraud, and money laundering. In September 2018 he received 220 months in federal prison and was ordered to pay more than $1.6 million in restitution.⁹

Jeremy Hutchinson pleaded guilty to filing a false tax return and multiple counts of conspiracy to commit federal program bribery, and was sentenced to eight years in federal prison.⁴ Hank Wilkins IV pleaded guilty to conspiracy to commit federal program bribery and a scheme to deprive citizens of honest services, and on January 18, 2023 was sentenced to a year and a day in federal prison, three years of supervised release, and $123,000 in restitution.¹⁰ Micah Neal, who pleaded guilty on January 4, 2017, received three years of probation with the first year on house arrest with electronic monitoring, 300 hours of community service, and $200,000 in restitution.⁹ Eddie Wayne Cooper pleaded guilty in February 2018 to conspiring to embezzle more than $4 million from the charity. D.A. Jones pleaded guilty in December 2017 to conspiracy to steal from an organization receiving federal funds and was sentenced on December 16, 2019 to a year and a day.¹¹

What PFH Itself Paid

On October 22, 2020, PFH agreed to pay $6.5 million to resolve federal and state false claims arising from the Medicaid billing. Of that, $4,555,632 settled the federal case and $1,944,368 went to Arkansas under the State False Claims Act.¹² The settlement carried a five-year Corporate Integrity Agreement with the U.S. Department of Health and Human Services running from October 19, 2020 through May 22, 2026.¹³ Then-Attorney General Leslie Rutledge called the fraud the product of “a culture of corruption at the highest levels of PFH in Arkansas.”¹⁴

On April 1, 2022, PFH entered a non-prosecution agreement with the U.S. Department of Justice and paid more than $8 million for the bribery and embezzlement side of the case. More than $6.9 million was forfeited to the federal government and more than $1.1 million went to Arkansas as restitution for misuse of General Improvement Fund money.¹ As part of the agreement, PFH admitted that former officers and employees conspired to embezzle funds and bribe elected officials, and acknowledged that its board of directors had allowed violations to occur through a “lack of proper oversight,” while noting the board was not receiving accurate information from management.¹⁵

The Taxpayer Suit That Failed

An Arkansas taxpayer, James Parsons, sued PFH under the state’s illegal-exaction doctrine, arguing that more than $52.8 million in state funds paid to the organization between 2010 and 2017 through Medicaid and the General Improvement Fund should be recovered because PFH had obtained them through fraud and bribery. The Benton County Circuit Court dismissed the case, and the Arkansas Court of Appeals affirmed in June 2022. The appeals court held that an illegal-exaction claim requires the state itself to have acted wrongfully; because Arkansas actually received the medical services it contracted for and was authorized by law to make the payments, the criminal conduct of PFH employees did not convert those expenditures into an illegal exaction.³

Employment Lawsuits

Separately from the corruption cases, PFH faced wage and discrimination suits from its own workforce. In October 2017, former mental health professional Frances Smith filed a collective action in the Eastern District of Arkansas alleging PFH paid employees only for hours billed to patients, denying overtime for work beyond 40 hours per week in violation of the Fair Labor Standards Act and the Arkansas Minimum Wage Act. Smith estimated the class exceeded 1,000 current and former employees, and the parties reached a confidential settlement in early April 2018.¹⁶ Former foster care case manager Shelbie Dawn Schweitzer brought Title VII and ADA claims in the Western District of Missouri.¹⁷ Former employee Amanda Wilson also sued in the Eastern District of Missouri over denied overtime; that case settled in May 2023 and was dismissed with prejudice.¹⁸

Where PFH Stands Today

PFH ceased all operations in Arkansas by October 2018 and no longer does business in the state.¹⁵ The organization replaced its leadership, put a new compliance program in place, and continued operating in Missouri, Illinois, Kansas, and Oklahoma.¹ PFH later became a subsidiary of Brightli, which in November 2025 completed a merger with Nashville-based Centerstone to form what the organizations described as the largest nonprofit behavioral health provider in the country.¹⁹ Under the merger, PFH and other Brightli subsidiaries will rebrand under the Centerstone name across a 14-month transition period.²⁰ As of 2026, PFH reports roughly 2,500 employees and 80 locations, with Michael Schwend serving as president.²¹

1
Springfield News-Leader. Preferred Family Healthcare To Pay $8M in Non-Prosecution Agreement
2
U.S. Department of Justice. Former Healthcare Executive Pleads Guilty to Bribing Arkansas State Senator
3
Court of Appeals of Arkansas. Parsons v. Preferred Family Healthcare, Inc.
4
Talk Business & Politics. Gosses Sentenced to Prison in Preferred Healthcare Bribery and Kickback Saga
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Talk Business & Politics. State Reaches False Claims Settlement With Preferred Family Healthcare
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Arkansas Times. State Gets $6.5 Million in Settlement of Medicaid Fraud Claims Against Preferred Family Healthcare
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U.S. Department of Justice. Two Former Missouri Health Care Charity Executives Sentenced
8
Arkansas Democrat-Gazette. Former Health Care Executive Who Admitted Bribing Senator Sentenced
9
Talk Business & Politics. Former State Sen. Jon Woods Appeals Conviction, Sentence in Kickback Scheme
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U.S. Department of Justice. Former Arkansas State Senator and Representative Sentenced
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KATV. New Jersey Man Sentenced to Prison for Arkansas Corruption
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HHS Office of Inspector General. Rutledge Announces Settlements With Preferred Family Health Totaling $6.5 Million
13
HHS Office of Inspector General. Corporate Integrity Agreement – Preferred Family Healthcare, Inc.
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Arkansas Money & Politics. Preferred Family Healthcare Settles Medicaid Fraud Cases for $6.5 Million
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Arkansas Times. Healthcare Company To Pay Additional $8 Million Arising From Corrupt Practices in Arkansas
16
Talk Business & Politics. Troubled Missouri Nonprofit Settles Wage Lawsuit Amid Federal Probe of Bribery Kickback Scheme
17
Justia. Schweitzer v. Preferred Family Healthcare, Inc. et al
18
CourtListener. Wilson v. Preferred Family Healthcare, Inc.
19
KFVS12. 2 Nonprofit Behavioral Health Care Providers Merge
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Centerstone. Centerstone and Brightli Complete Merger
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Preferred Family Healthcare. Preferred Family Healthcare