California health system pays $5 million for alleged Medicaid false claims
Plaintiffs alleged that LVMC claimed and received payments that were not for "allowed medical expenses" permissible under state contracts.
Photo: Emir Memedovski/Getty Images
Lompoc Valley Medical Center (LVMC), a California healthcare system that operates multiple providers including a hospital and several clinics, has agreed to pay $5 million to resolve allegations that it violated the False Claims Act and the California False Claims Act by submitting false claims to Medi-Cal, the state's Medicaid program.
The alleged false claims were related to Medicaid Adult Expansion under the Affordable Care Act, according to the Department of Justice.
Beginning in January 2014, Medi-Cal was expanded to cover the previously uninsured "adult expansion" population – adults between the ages of 19 and 64 without dependent children with annual incomes up to 133% of the federal poverty level. The federal government fully funded the expansion coverage for the first three years of the program.
Under contracts with California's Department of Health Care Services (DHCS), Santa Barbara San Luis Obispo Regional Health Authority, doing business as CenCal Health (CenCal), arranges for the provision of healthcare services as a county organized health system under Medi-Cal in Santa Barbara County and San Luis Obispo County, California, by contracting with providers such as LVMC to provide healthcare services to Medi-Cal patients.
Under its contractual arrangement with DHCS, CenCal received funding to serve the Adult Expansion population. If CenCal did not spend at least 85% 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% and what it actually spent. California, in turn, was required to return that amount to the federal government.
The settlement resolves allegations that LVMC knowingly submitted false claims to Medi-Cal between January 1, 2014 and June 30, 2016.
WHAT'S THE IMPACT?
The DOJ and the state alleged that LVMC claimed and received payments pursuant to those agreements that were not for "allowed medical expenses" permissible under the contract between DHCS and CenCal; were predetermined amounts that did not reflect the fair market value of any enhanced services provided by LVMC; and/or the enhanced services were duplicative of services already required to be rendered by LVMC.
The plaintiffs also alleged that the payments were unlawful gifts of public funds in violation of the California Constitution.
All told, the settlement brings the U.S.'s total recovery to $95.5 million. CenCal, Cottage Health System, Sansum Clinic and Community Health Centers of the Central Coast previously paid $68 million, and Dignity Health and Twin Cities Community Hospital and Sierra Vista Regional Medical Center – two subsidiaries of Tenet Healthcare Corporation – previously paid $22.5 million to settle similar False Claims Act allegations.
THE LARGER TREND
Settlements and judgments under the False Claims Act exceeded $2.2 billion in 2022, more than $1.7 billion of which pertained to matters that involved the healthcare industry – including drug and medical device manufacturers, durable medical equipment, home health and managed care providers, hospitals, pharmacies, hospice organizations, and physicians.
The False Claims Act imposes treble damages and penalties on those who knowingly and falsely claim money from the federal government or knowingly fail to pay money owed to the United States.
The amounts included in the $1.7 billion reflect recoveries arising just from federal losses. In many of these cases, the department was instrumental in recovering additional amounts for state Medicaid programs, the DOJ said.
Twitter: @JELagasse
Email the writer: Jeff.Lagasse@himssmedia.com
