California county, three health systems pay $70.7 million for Medicaid fraud

Justice Department: Federal health care money not a “blank check” to misuse.

The health system operated by Ventura County, California, and three health care providers will pay $70.7 million to settle allegations they defrauded California’s expanded Medicaid program.

The U.S. Department of Justice (DOJ) and the California Attorney General’s Office announced the settlement for false claims from January 2014 to May 2015. The time coincides with California’s expansion of its Medicaid program, known as Medi-Cal, to cover previously uninsured adults with incomes up to 133% of the federal poverty level.

That expansion was allowed under the federal Affordable Care Act and was reimbursed by the federal government for the first three years. If county organized health systems (COHSs) did not spend at least 85% of the money they received on allowed medical expenses, they were required to reimburse the state of California, which would return the money to the federal government, according to DOJ.

The settlement resolves allegations that the county and three health care systems knowingly submitted false claims to Medi-Cal for allowable expenses, according to DOJ. The billed services were duplicative of those already provided, and some services were never provided, Acting U.S. Attorney Stephanie S. Christensen said in a news release.

“Federal health care funds are not intended to serve as a blank check,” Principal Deputy Assistant Attorney General Brian M. Boynton said in a news release. Boynton serves as head of DOJ’s Civil Division.

“Health systems and health care providers will be held accountable when they misuse such funds, including funds intended to support Medicaid expansion programs,” Boynton said.

The entities involved and their settlements were:

  • The Ventura County Medi-Cal Managed Care Commission, which does business as Gold Coast Health Plan. It is a COHS that contracts to arrange for health care services under the Medi-Cal in Ventura County. Gold Coast will pay $17.2 million to the federal government.
  • Ventura County, which operates the Ventura County Medical Center, an integrated health care system with hospital, clinic and specialty services. The county will pay $29 million to the federal government.
  • Dignity Health, a San Francisco, California-based nonprofit hospital system operating two acute care hospitals in Ventura County. Dignity Health will pay $10.8 million to the federal government and $1.2 million to the state of California.
  • Clinicas del Camino Real Inc., a nonprofit health care organization headquartered in Camarillo, California. Clinicas will pay $11.25 million to the federal government and $1.25 million to the state of California.

Gold Coast and Ventura County must enter five-year corporate integrity agreements with compliance agreements and annual reviews completed by independent consultants, according to DOJ.

The settlements resolve claims filed through whistleblower provisions of the federal False Claims Act by former leaders of Gold Coast, according to DOJ.

The Justice Department and U.S. Department of Health and Human Services (HHS) nabbed a record $5 billion in health care fraud judgments or negotiated settlements for 2021. In July, they announced medical fraud estimated at more than $1.2 billion, leading to criminal charges against 36 defendants across the country, prompting HHS guidance to physicians about clues that indicate illegal schemes, particularly in telehealth.

Tips about waste, fraud, abuse and mismanagement can be reported to HHS by calling 1-800-HHS-TIPS, or 1-800-447-8477.