A county-organized health system and three health care providers across San Luis Obispo and Santa Barbara counties will be finding their coffers lighter by $68 million combined for allegedly knowingly submitting false claims to Medi-Cal.
A press release from the U.S. Department of Justice revealed that on June 28, a federal judge unsealed the whistleblower case naming the four entities involved in the False Claims Act and the California False Claims Act violations. They are the Santa Barbara SLO Regional Health Authority, operating as CenCal Health; Community Health Centers of the Central Coast (CHC) that works out of both counties; and the Santa Barbara County-based Cottage Health System and Sansum Clinic.
The whistleblower is CenCal’s former medical director, Julio Bordas, according to the press release. Under the False Claims Act, a private party filing an action on behalf of the United States is privy to a portion of any sum recovered. Bordas will receive $12.56 million as his share of the federal recovery.
“Qui tam—or ‘whistleblower’—lawsuits are filed under seal. I believe the underlying case remains under seal at this time,” Thom Mrozek, a spokesperson for the U.S. Attorney’s Office’s Central District of California, told New Times.
The Department of Justice released the settlement agreement documents for each of the four groups. CenCal, CHC, Cottage Health System, and Sansum Clinic will pay $49.5 million, $3.15 million, $9 million, and $4.5 million, respectively, to the United States. They will pay a total of $1.85 million to California.
The allegations pertain to false claims being submitted for “enhanced services” for the previously uninsured adult expansion population. Members of this group are adults between 19 and 64 years old without dependent children, and with annual incomes up to 133 percent of the federal poverty level.
In accordance with the Affordable Care Act, Medi-Cal expanded to cover the adult expansion group in 2014. The federal government fully funded that expansion coverage for the first three years. The false claims submissions from all the concerned groups allegedly took place over different periods between January 1, 2014, and June 30, 2016.
“Under contracts with California’s Department of Health Care Services (DHCS), if CenCal did not spend at least 85 percent of the funds it received for the adult expansion population on ‘allowed medical expenses,’ CenCal was required to pay back to the state the difference between 85 percent and what it actually spent,” the press release read. “California, in turn, was required to return that amount to the federal government.”
According to CenCal’s settlement agreement, the United States and California alleged that under the contract made by DHCS and CenCal, the latter’s payments weren’t for “allowed medical expenses.” The federal and state groups argued that the payments were, in fact, “unlawful gifts of public funds in violation of the California Constitution.”
“The payments were for pre-determined amounts that did not reflect the cost or fair market value of any enhanced services provided, and/or the enhanced services were duplicative of services already required to be rendered,” CenCal’s settlement agreement stated.
This isn’t the Central Coast’s first brush with false claims submission allegations relating to the adult expansion program. Last December, Dignity Health, Twin Cities Community Hospital, and Sierra Vista Regional Medical Center paid a total of $22.5 million to the United States to settle similar allegations.
The Justice Department recommended filing tips and complaints about health care fraud to the Department of Health and Human Services at (800) 447-8477.
“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 Bonta in the press release. “When any health care provider or agency defrauds the program, they break the public’s trust and put their own bottom line before the patients who count on them for honest, quality care and services.” Δ
This article appears in Jul 6-16, 2023.