California Attorney General, Rob Bonta, in partnership with the U.S. Department of Justice (USDOJ), announced four settlements totaling $68 million against three health care providers and one public health agency, all based in Central and Southern California, for fraudulent Medi-Cal claims.
The settlement resolves allegations that Community Health Centers of the Central Coast (CHC), Cottage Health System (Cottage), Sansum Clinic (Sansum) and CenCal Health submitted or caused the submission of fraudulent Medi-Cal claims in violation of state and federal false claims laws.
The filings are further alleged to be part of an organized scheme to improperly withhold federal funds that financed the expansion of Medi-Cal for adults.
“Medi-Cal is a lifeline that provides access to free or affordable health care services for millions of Californians and their families,” said Attorney General Bonta.
“When any health care provider or agency defrauds the program, they break the public’s trust and put profits ahead of the patients who count on them for honest, quality care and services. The California Department of Justice and our law enforcement partners will continue to hold accountable those who defraud the Medi-Cal program and protect those it serves,” she said.
Under the Affordable Care Act (ACA), beginning in January 2014, Medi-Cal was expanded to cover the previously uninsured “Adult Expansion” population: adults between the ages of 19 and 64 with no dependent children and with annual incomes up to 133 percent of the federal poverty level.
The four settlements resolve allegations that CHC, Cottage, Sansum and CenCal Health knowingly submitted or caused the submission of false claims to Medi-Cal for “additional services” provided to Adult Expansion Medi-Cal members.
California and the United States alleged that the payments were not “allowable medical expenses” under CenCal’s health contract with DHCS, were predetermined amounts that did not reflect the fair market value of the additional services provided, and/or the additional services were a duplication of services already required to be provided.
California and the United States further argued that the payments were illegal gifts of public funds in violation of the California Constitution.
The AE program was funded by the federal government. Therefore, most of the settlement amount will go to the federal government. California will receive a 10 percent share of Medicaid recoveries because the case involves California's False Claims Act and the alleged fraud affected Medi-Cal.
Specifically, CenCal Health will pay $49.5 million to the United States; CHC will pay $3.15 million to the United States and $350,000 to California; Cottage will pay $9 million to the United States and $1 million to California; and Sansum will pay $4.5 million to the United States and $500,000 to California. In total, California will receive $1.85 million.
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