Ventura County Medi-Cal Managed Care Commission doing business as Gold Coast Health Plan (Gold Coast), a county-organized health system (COHS) that is committed to organizing the delivery of health care services in the part of the California Medicaid (Medi-Cal) program in Ventura County, California; Ventura County, which owns and operates the Ventura County Medical Center, an integrated health care system that provides hospital, clinical and specialty services; Dignity Health (Dignity), a nonprofit hospital system that operates two acute care hospitals in Ventura County; and Clinicas del Camino Real Inc. (Clinicas), a Ventura County-based nonprofit healthcare organization, have agreed to pay a total of $70.7 million under three separate settlements to resolve the allegations that they violated the Federal Misrepresentation Act and the California False Claims Act by submitting or causing the submission of false claims to Medi-Cal related to the expansion of Medicaid for adults under the Privacy Act. Patients and Affordable Care (ACA).
In accordance with the ACA, beginning in January 2014, Medi-Cal was expanded to cover the previously uninsured “adult expansion” population – adults aged 19-64 without dependent children with annual incomes up to 133% of the federal poverty level. The federal government fully funded the coverage expansion for the first three years of the program. Pursuant to contracts with the California Department of Health Care Services (DHCS), if a California COHS did not spend at least 85% of the funds it received for the expanding adult population on “allowable medical expenses”, the COHS was required to reimburse the state the difference between 85% and what he actually spent. California, in turn, was required to return this amount to the federal government.
The three settlements resolve allegations that Gold Coast, Ventura County, Dignity and Clinicas knowingly submitted or caused the submission of false claims to Medi-Cal for “additional services” provided to adult members of Medi-Cal Expansion between the January 1, 2014 and May 31, 2015. The United States and California alleged that the payments were not “permissible medical expenses” under Gold Coast’s contract with DHCS; were pre-determined amounts that did not reflect the fair market value of the additional services provided; and/or the Additional Services duplicated services that were already to be rendered. The United States and California further alleged that the payments were illegal donations of public funds in violation of Article IV, Section 17 of the California Constitution.
As a result of the settlements, Gold Coast will pay $17.2 million to the United States; Ventura County will pay US$29 million; Dignity will donate $10.8 million to the United States and $1.2 million to the State of California; and Clinicas will pay $11.25 million to the United States and $1.25 million to the State of California.
“Federal health care funds are not intended to serve as a blank check,” said Senior Assistant Deputy Attorney General Brian M. Boynton, chief of the Justice Department’s Civil Division. “Health systems and health care providers will be held accountable when they misuse these funds, including funds intended to support Medicaid expansion programs.”
“We will pursue every health plan and provider that prioritizes profits over patients,” said Acting U.S. Attorney Stephanie S. Christensen for the Central District of California. “The money at issue in this case was designated by the federal government to pay for treatment services for Medicaid expansion patients, and it should never have been used to pay twice for services that had already been reimbursed or to pay for services that were simply never provided. Medicaid is a taxpayer-funded program that exists to help patients pay for health care, and it should never be used to line the pockets of health care providers through fraudulent schemes.
“Medicaid expansion programs were created to ensure access to coverage for those who need health care services. Anyone who illegitimately misappropriates Medicaid funding for their own financial gain prevents precious taxpayers’ money from being used for its intended purpose,” said Special Agent in Charge Timothy DeFrancesca of the U.S. Department of Health and Human Services, Bureau of the Inspector General (HHS-OIG) . “HHS-OIG will not hesitate to investigate and prosecute all forms of health care fraud.”
“Medi-Cal supports our communities by providing access to free or affordable healthcare services to millions of Californians and their families. Those who try to fool the system are fooling our essential care communities,” California Attorney General Rob Bonta said. “I want to express my gratitude to the U.S. Department of Justice and the U.S. Attorney’s Office in Los Angeles for their tremendous efforts throughout this investigation. The California Department of Justice and our law enforcement partners law will continue to hold accountable those who defraud the Medi-Cal program and protect those it serves.
Along with settling the False Claims Act, the US Department of Health and Human Services agreed to waive its right to exclude Gold Coast and Ventura in exchange for their agreements to enter into Corporate Integrity Agreements (CIAs) of five years. The CIAs require, among other things, that Gold Coast and Ventura County each implement centralized risk assessment programs as part of their compliance programs and each engage an independent review organization to conduct annual reviews. Gold Coast’s annual reviews will focus on its calculation and reporting of medical loss rate data under Medi-Cal, while Ventura County’s annual reviews will target hospital claims submitted to Medicare and Medicaid, including including claims submitted to Medicaid managed care organizations.
Civil settlements include the settlement of claims brought under the who tam or the whistleblower provisions of the False Claims Act by Atul Maithel, former Comptroller of Gold Coast, and Andre Galvan, former Director of Membership Services at Gold Coast. Under these provisions, a private party can sue on behalf of the United States and receive a portion of any recovery. The whistleblowers also alleged claims under California’s misrepresentation law. The who tam the case is subtitled United States, et al. ex rel. Maithel, et al. v. Ventura Co. Medi-Cal Managed Care Commission d/b/a Gold Coast Health Plan, et al.No. 15-7760AB TJH (JEMx) (CD Stallion).
The resolution achieved in this case is the result of a coordinated effort between the Department of Justice’s Civil Division, the Commercial Litigation Branch, the Fraud Section, the U.S. Attorney’s Office for the Central District of California, and the Department of California Justice, with assistance from HHS-OIG and DHCS.
The investigation and resolution of this case illustrates the government’s focus on combating health care fraud. One of the most powerful tools in this effort is the False Claims Act. Tips and complaints from all sources regarding potential fraud, waste, abuse, and mismanagement may be reported to the Department of Health and Human Services at 800-HHS-TIPS (800-447-8477).
Trial Attorneys Alison Rousseau and Mary Beth Hickcox-Howard of the Civil Division’s Commercial Litigation Division, Fraud Section and Assistant U.S. Attorney Jack D. Ross for the Central District of California handled the case.
The claims resolved by the settlement are allegations only and no liability has been determined.