Unsealed whistleblower lawsuit accuses Molina of fraud in Illinois SNF program

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A whistleblower accused Molina of neglecting to implement a "SNFist" program and deceiving state and federal officials. (Getty/eccolo74)

A newly unsealed whistleblower lawsuit accuses Molina Healthcare of deceiving state and federal regulators by neglecting to provide mandatory nursing home care, in violation of its managed care contracts with the state of Illinois.

Illinois Medicaid plans are required to operate "SNFist" programs where licensed clinicians check in on plan members in skilled nursing facilities in an effort to improve outcomes and prevent unnecessary hospitalization.

The complaint, originally filed in September 2017, details Molina’s decision to end its contract with a company providing specialized nursing home services through a SNFist program. After it stopped making payments to a SNFist contractor, Molina failed to implement a replacement for over two years without notifying the Illinois Department of Healthcare and Family Services, according to the lawsuit. 

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“This is not merely a matter of contractual non-compliance: Molina's very top executives knew all the relevant facts, but concealed them from the Department for over two years now, all the while seeking payment from the Illinois Medicaid program, and indeed, seeking to renew the very contract that Molina has intentionally refused to honor,” the complaint (PDF) states.

Molina signed a new Medicaid managed care contract with Illinois in August 2017. The contract began in January 2018 with options to renew annually for up to four years. Molina covered 233,000 people across the state as of Sept. 30, 2018.

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The lawsuit was filed by Thomas Prose, M.D., the CEO and founder of General Medicine, a collaborative group of physicians and advanced nurse practitioners that specialize in post-acute longterm care.

General Medicine was contracted by Molina in 2014 to provide SNFist services required in the Illinois Medicaid contract. But four months in, Molina stopped payments, claiming the provider did not complete required exams.

A Molina executive later testified in arbitration hearings that General Medicine had fulfilled its contractual obligations. In an internal email, Cathy Harvey, the former president of Molina Healthcare of Illinois, said it was too expensive to continue paying General Medicine, and ordered the financial department to cease payments until it could renegotiate the contract.

Court documents show Molina paid General Medicine $382,000 over a four-month span.

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General Medicine terminated the contract months later. Molina of Illinois' former Chief Operating Officer Ben Schoen testified in an arbitration hearing that although the company planned to implement its own SNFist program, it didn’t have the “ability or licensure” to provide those specialized services.

“They were only able to go in and do the administrative, ‘Fill out this form,’” he said.

In May 2015, Molina sent a memo (PDF) to providers indicating that it had taken over face-to-face evaluations required under the SNFist program. Beginning in June 2015, MedXM was contracted by Molina to perform comprehensive examinations by nurse practitioners. 

However, court filings show Schoen testified on April 2017 that the company had not implemented a SNFist program once it cut ties with General Medicine. He added that MedXM performed assessments for homebound patients but not for patients in skilled nursing facilities. Audit reports to the state did not distinguish between home and SNF assessments, according to Schoen. 

Executives also testified that neither the state of Illinois nor the Centers for Medicare & Medicaid Service conducted specific audits for the SNF program. CMS did conduct monthly conference calls with Molina and asked about the SNFist program.

“Molina's silence, despite its obligation to report its deficiencies and its knowledge that it had no plan to address its deficiencies, was designed to keep the funding spigot open,” the lawsuit states.

Prose has asked for a jury trial to force Molina to pay three times the damages the federal government and the state of Illinois have sustained, plus civil penalties for each violation of the False Claims Act.

The lawsuit was unsealed on Tuesday after the U.S. government and the state of Illinois declined to intervene on the case. A spokesperson for Molina did not immediately respond to a request for comment.

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