The California Department of Justice filed a lawsuit Wednesday, Sept. 17, against Inland Empire Health Plan alleging the organization submitted false claims to Medi-Cal.
The complaint, filed in the Central District of California, alleges violation of the federal False Claims Act, according to the DOJ.
The organization contracts with California’s Department of Health Care Services to provide services to residents of San Bernardino and Riverside counties under state’s Medicaid program, known as Medi-Cal.
“Today’s lawsuit against IEHP shows our steadfast commitment to hold accountable insurers that brazenly compromise the Medicaid system,” Acting United States Attorney Bill Essayli said. “We will take every measure to restore integrity and accountability to the Medicaid system and ensure that patient care – not financial gain – is the primary focus of our health care system.”
IEHP attorney calls allegations “misguided” and “galling”
IEHP representatives denied wrongdoing.
“IEHP strongly disagrees with the DOJ allegations and is prepared to defend our efforts through the appropriate legal process,” the organization said in a written statement..
Attorney Winston Chan of Gibson, Dunn & Crutcher LLP, who represents the company, said the complaint was unfounded.
“Through this misguided civil legal dispute, the federal government is trying to contest Medi-Cal health benefits paid out a decade ago and that were previously disclosed to and approved by regulators, with full transparency,” he said. “The allegations are a brazen attempt at revisionist history that is not only wrong as to the facts and law, but also particularly galling in light of the federal government’s wider attacks on state Medicaid funding.”
The attorney also pointed out that the state of California did not join the federal government as a plaintiff in the case.
“Conspicuously absent from the lawsuit… is any allegation whatsoever that Inland Empire Health Plan or its personnel retained any of the funds in question or that providers serving the neediest Californians did not actually receive every dollar awarded to them,” according to Chan. “We look forward to taking this case to court and exposing the mistaken assumptions, flawed reasoning, and false conjecture that is rife throughout the allegations, and ensuring that our client is not distracted from its not-for-profit mission to heal and inspire its 1.5 million underserved members in Riverside and San Bernardino counties.”
What does the lawsuit against IEHP allege?
The federal lawsuit contends that IEHP submitted false statement to Medi-Cal and knowingly retaining overpayments, according to a DOJ statement.
Following an expansion of Medi-Cal in 2014, the first three years of the program were fully funded by the federal government, prosecutors said.
Under its contract with state officials, if IEHP did not spend at least 85% of the funds on “allowed medical expenses,” the health plan was required to repay the state the difference between 85% of the funding and actual expenditures. The state was then required to pay those funds back to the federal government.
According to the DOJ statement, “IEHP developed schemes to misuse surplus Medi-Cal Expansion funding, falling into two broad categories: (1) sham incentive programs and (2) an extra-contractual retroactive rate increase.”
Prosecutors allege the organization misspent funds for “impermissible purposes,” including administrative expenses and “simply giving away federal funding in exchange for no value in return.”
“The complaint further alleges that IEHP was motivated by a desire to conserve its other funding, thus enriching itself,” the statement said. “IEHP officials “deceived the state” through false statements, “which it knew would be relayed to the federal government—about the nature, timing, and purpose of its payments to providers.”
The complaint accuses IEHP of “wrongfully retain at least $320 million in federal funding that it should have returned.”
The services provided by Medicaid and Medical are vital, Deputy Assistant Attorney General Brenna Jenny said.”
“Today’s complaint demonstrates our continued commitment to protect the integrity of the Medicaid program, and the taxpayer dollars that support it, from health insurers that knowingly seek to divert program funds for their own financial benefit.”
