On December 7, 2022, three health care providers reached two separate settlements to resolve allegations that they violated the federal False Claims Act and the California False Claims Act by causing the submission of false claims to Medi-Cal related to the Medicaid Adult Expansion under the Patient Protection and Affordable Care Act.
Under the ACA, starting in January 2014, Medi-Cal was expanded to cover adults between the ages of 19 and 64 without dependent children with annual incomes up to 133% of the federal poverty level. The expansion coverage was fully funded by the federal government for the first three years. However, if a California county organized health system (COHS) did not spend at least 85% of the funds it received for the Adult Expansion population on “allowed medical expenses,” the COHS was mandated to repay the difference between 85% and what was actually spent.
Dignity Health owns and operates three hospitals and one clinic in California. Tenet Healthcare Corporation subsidiaries Twin Cities Community Hospital and Sierra Vista Regional Medical Center are two acute healthcare facility subsidiaries operating in San Luis Obispo County.
The three providers – Dignity, Twin Cities, and Sierra Vista – allegedly knowingly caused the submission of false claims to Medi-Cal for “Enhanced Services.” Dignity purportedly provided the services to Adult Expansion patients between February 1, 2015, and June 30, 2016. Twin Cities and Sierra Vista allegedly provided the services to Adult Expansion patients between January 1, 2014, and April 30, 2015.
According to the United States government, the payments were not “allowed medical expenses.” Additionally, the payments were either for pre-determined amounts that did not reflect the fair market value of any Enhanced Services provided, and/or the Enhanced Services were duplicative of services already required to be rendered. The government (federal and California) also alleged that the payments were illegal gifts of public funds, in violation of the California Constitution.
Dignity agreed to pay $13.5 million to the United States and $1.5 million to the State of California. The relator who brought the initial qui tam suit against Dignity and its subsidiaries will receive $2,598,750 of the United State’s share and $381,750 of California’s share.
Twin Cities and Sierra Vista agreed to pay $6.75 million to the United States and $750,000 to the State of California. The relator who brought the initial qui tam suit (same relator for both settlements) will receive $1,299,375 from the United States’ share and $190,875 from the California share.
None of the hospitals admit to any liability or wrongdoing as part of the settlements.
“Every day, Medi-Cal provides support for Californians in need of essential healthcare, and when companies take advantage of this system at the expense of patients, they must be held accountable,” said California Attorney General Rob Bonta. “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 extensive efforts throughout the course of this investigation. The California Department of Justice will continue to prosecute corporations that seek to abuse the Medi-Cal system for their own benefit.”