California Attorney General Rob Bonta recently announced a $215,392,758 settlement with Centene Corporation and its subsidiaries over allegations that the company overcharged the California Medi-Cal program. Attorney General Bonta had alleged that Centene overcharged Medi-Cal by reporting inflated prescription drug costs, specifically that the company used its pharmacy benefit manager (PBM) contracts to save its managed care plans $2.70 per prescription drug claim over a two-year period, but did not pass those savings on to Medi-Cal.
The case was initially brought by a Relator via a qui tam action in April 2022 and the Department of Justice and the California Department of Health Care Services investigated the case, finding that between January 2017 and December 2018, Centene’s subsidiaries California Health & Wellness and Health Net reported the aforementioned inflated figures for the costs they incurred while providing prescription drugs to patients, failing to pass the savings on to Medi-Cal.
Three additional California agencies – the Department of Managed Health Care, the Department of Insurance, and Covered California – helped in the resolution of the case as well.
The $215 million settlement is roughly twice the value of the inflated price reporting and “ensures full restitution to the Medi-Cal program,” according to the press release issued by Attorney General Bonta.
The settlement is to be paid in two equal installments, with the first one due within 45 days of the settlement being signed by all parties and the second one due no later than one year after the first installment. Additionally, the settlement notes that all amounts to be paid by Centene are “for restitution or to come into compliance with the law within the meaning of those terms under 26 U.S.C. section 162(f) and Treas. Reg. § 1.162-21.” None of the settlement is considered a “fine, penalty, punitive damages, disgorgement of profits beyond restitution, or an amount paid in settlement of any claim for any of the foregoing.”
“Medi-Cal is a lifeline that provides access to free or affordable healthcare services for millions of Californians,” said Attorney General Bonta. “When companies overcharge the Medi-Cal system, it drains valuable resources from the people who rely on this care. Today’s settlement is a win — it brings resources directly back to our state. At the California Department of Justice, we will continue using every tool we have to fight for California’s vulnerable communities.”
Other Similar Settlements
California is not the only state to settle with Centene over these allegations. Indiana Attorney General Todd Rokita also reached a settlement with Centene and its subsidiaries for $66.5 million, Iowa Attorney General Tom Miller announced a $44.4 million settlement with Centene and its subsidiaries, and Oregon Attorney General Ellen Rosenblum and Insurance Commissioner Andrew Stolfi announced a $17 million settlement with Centene and its subsidiaries. Kansas, Illinois, Arkansas, Ohio, and Mississippi also reached similar settlements with Centene and subsidiaries in 2021.
Centene did not admit any liability in any of the settlements.