The Department for Work and Pensions has announced US company Maximus will carry out the controversial Work Capability Assessments.
Work and Pensions Secretary Iain Duncan Smith said the change means a “fresh approach”.
But US court files show Maximus has spent millions on payouts in the past settling lawsuits – including allegations of fraud, improper expenses and even disability discrimination.
MPs and disability groups are so worried they have signed an open letter to Mr Duncan Smith warning of “deep concern” over the £500million contract. The letter asks why the Government “appears to have chosen to repeat its mistakes”.
In 2007, Maximus agreed to pay £20million to the US federal government to settle criminal charges.
The government alleged Maximus had helped the District of Columbia’s Child and Family Services Agency submit false claims to the Medicaid scheme, which provides health care to mainly elderly and disabled people.
The lawsuit was filed on behalf of the government by Benjamin Turner, a former human resources director at Maximus.
The claims related to services “for abused or neglected children”. Maximus did not admit or deny the allegations.
This followed a previous payout of £600,000 to the State of Wisconsin in 2000.
Between 1997 and 2001, Maximus held £65.5m in contracts at the Department of Workforce Development including the W-2 employment scheme, which gave cash help to poor families.
But it was ordered to pay back £300,000 after billing the state for improper expenses including “social functions and entertainment”.
As a show of “good faith,” it also wrote a cheque for a further £300,000.
Earlier this year, the State of Illinois terminated a £50m contract with Maximus to help clear a Medicaid backlog for the Department of Healthcare and Family Services.
Maximus had claimed it would save the state £221 million by using sophisticated data-mining computer systems to kick ineligible people off Medicaid.
But trade union AFSCME Council 31 had Maximus dismissed by an official arbitrator – following a federal review which found “about 30% of the Maximus recommendations for cancellation were in error”.
This week, I asked the union what it thought about the company winning the former Atos contract.
“Determining the needs of the disabled is a complex process requiring a professional workforce,” a union representative told me.
“So is Medicaid eligibility determination. Our experience of Maximus would argue their track record isn’t a good indicator that they can successfully fulfil the UK contract.”
They added that Illinois has now had to hire 200 additional caseworkers to review Maximus’ work. “Maximus’ high error rate was a result of employees with little experience and a high school diploma being unable to apply complex Medicaid rules,” the union said.
Perhaps most concerning of all, for a firm carrying out tests on disabled people, is that it was forced to pay out £30,000 after a disability discrimination case in 2012.
The US Equal Employment Opportunity Commission (EEOC) said the company had failed to promote an employee called Thelma Austin in 2009 in North Virginia, because she needed physiotherapy after suffering a stroke.
This was despite a “medical clearance form that cleared her to work”.
Maximus was ordered to refrain from “engaging in any further discrimination against any person on the basis of disability”, and agreed to be monitored by the EEOC .
This followed a ruling in 2000 that the company had violated federal law by paying lower wages to women than to men placed in the same jobs in a warehouse in Milwaukee, Wisconsin.
The federal commission’s ruling found a woman placed in warehouse jobs by MaxStaff, a temping agency owned by Maximus, was paid £4.42 an hour while five male workers got £5.13.
“The goal was not to remove women from poverty, but simply from the welfare rolls,” the hearing was told.
“Sick and disabled people will feel they’re being flung from the frying pan into the fire,” says Mark Serwotka, general secretary of the PCS union, which believes the contract is too sensitive to be run for profit by private companies.
“The fact ministers have appointed a company with such a chequered history speaks volumes about its plans for these tests which should instead be scrapped.”
This week Serwotka has written an open letter to Mr Duncan Smith, signed by MPs, and the campaigning groups Disabled People Against the Cuts, Inclusion London and Black Triangle.
John McDonnell MP has tabled a question to Parliament asking what “investigations were undertaken into the work of US company Maximus… and whether any issues of concern were raised as a result?”
A Maximus spokesman said: “Maximus successfully delivers thousands of contracts around the world. We operate to the highest ethical and professional standards. On a few occasions we fell short of those standards. These are historic cases, some going back many years, and have long since been resolved.
“Since our current management team and CEO took over in 2006, Maximus has gone through a huge investment and improvement programme. This included fixing contracts that did not live up to the Maximus standards and in all of these cases we took quick remedial action to put problems right.”
A DWP spokesman added: “As one of the largest occupational health providers in the UK and for governments worldwide, Maximus has a strong track record in excellent clinical expertise and will speed up how long people wait for an assessment by hiring significantly more health care professionals.”