The Department of Justice announced on June 29 that four Central Coast healthcare organizations will pay $68 million to settle allegations of alleged Medicaid fraud, the result of a whistleblower case the organizations were originally involved in.
The department alleged that the organizations violated the False Claims Act and the California False Claims Act by making or causing false claims to be filed with Medi-Cal, a California health coverage program designed generally for those in low-income groups.
The four organizations are CenCal Health, a nonprofit organization that contracts with the state to administer Medi-Cal benefits through providers in San Luis Obispo and Santa Barbara counties; Sansum Clinic, a nonprofit that provides outpatient services in San Luis Obispo and Santa Barbara counties; Cottage Health, a nonprofit hospital network operating in Santa Barbara County; and Central Coast Community Health Centers (CHC).
CenCal will pay most of the $68 million – $49.5 million. Cottage will pay $9 million, Sansum $4.5 million, and CHF 3.15 million. The majority of the money will go to the federal government. The state of California will receive $1.85 million.
According to the ACA, beginning in January 2014, Medi-Cal expanded to previously uninsured “adult expansion” — adults ages 19 to 64 without dependent children with annual incomes up to 133% of the federal poverty level. The federal government fully funded expansion coverage for the first three years of the program. Under contracts with the California Department of Health Care Services (DHCS), if CenCal did not spend at least 85% of the money it received for adult expansion residents on “allowable medical expenses,” CenCal was required to repay the state the difference between the 85% and what it actually spent . California, in turn, was required to return this amount to the federal government.
Ministry of Justice
The United States and the state of California alleged, according to the statement, that the payments were disallowed for medical expenses, were predetermined amounts that did not reflect fair market value, or the services were a duplicate of services actually required to be provided. The United States and California alleged that the payments were illegal gifts of public funds, in violation of the California Constitution, and the release proceeded.
The informant, Dr. Julio Bordas, was CenCal’s former medical director. Bordas will receive approximately $12.56 million as part of his share of the federal recovery, the statement said.
Under the False Claims Act, whistleblowers are encouraged to make false claims on behalf of the government. The whistleblower, part of the 1986 Act’s enhancement by Congress, is entitled to a portion of the refund.
These whistleblower claims, called from tamaccounted for a significant proportion of false claims statute cases filed, according to the Department of Justice.
“Medi-Cal is a lifeline that provides access to free or affordable health care services for millions of Californians and their families,” said California Attorney General Rob Ponta. “When any health care provider or agency defrauds the program, they breach the public’s trust and put their bottom line in front of patients who depend on them to receive honest, high-quality care and services. I am grateful to the USDOJ for its extensive efforts throughout this investigation. The California Department of Justice will continue And our law enforcement partners hold those who defraud Medi-Cal accountable, and protect those they serve.”
The statement said the US previously settled similar claims against Dignity Health, Twin Cities Community and Sierra Vista Regional Medical Center in connection with payments the organizations received from CenCal under the Adult Expansion Program.
Read the Justice Department’s full statement here.
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