3 providers to pay $22.5M to settle Medicaid fraud allegations in California

Three providers will pay out $22.5 million across two separate settlements to resolve false claims allegations in California, the Department of Justice (DOJ) announced.

Dignity Health and two Tenet Healthcare subsidiaries will settle allegations that they violated both federal and state false claims laws by submitting fraudulent claims to California's Medicaid program, Medi-Cal. Dignity Health will pay $13.5 million to the U.S. government and $1.5 million to the state to resolve the allegations.

Twin Cities Community Hospital and Sierra Vista Regional Medical Center, the Tenet affiliates, will pay $6.75 million to the U.S. and $750,000 as part of the settlement, DOJ said.

“These health care providers siphoned critical Medicaid funding for their own gain instead of using it to provide health care services to patients most in need,” said U.S. Attorney Martin Estrada for the Central District of California in the release. “These major settlements demonstrate our commitment to hold accountable health care providers that seek to exploit the Medicaid program and harm the American taxpayer.”

California expanded its Medicaid program under the Affordable Care Act in January 2014, providing coverage to a larger adult population. The feds cover the costs for the adult population in the first three years of the program, and states were required to use at least 85% of those funds to cover medical costs. States had to repay the federal government the difference between what was actually spent and that 85% figure.

The settlements resolve allegations that Dignity Health submitted false claims for "enhanced services" provided to the expansion population between Feb. 1, 2015, and June 30, 2016. Twin Cities and Sierra Vista will resolve allegations for claims submitted between Jan. 1, 2014, and April 30, 2016.

The federal government and the state determined the submitted charges were not "allowed medical expenses" under the program—represented predetermined amounts that did not reflect the value of services provided and/or were duplicative services.

“When health care providers misuse Medicaid funds, they undermine the integrity of the Medicaid program and waste taxpayer funds,” said Deputy Assistant Attorney General Michael Granston of the DOJ’s Civil Division. “These settlements demonstrate the Department’s continued commitment to prevent providers from inappropriately using Medicaid or other federal health care programs for their own financial gain.”