Two healthcare providers, including Dignity Health, in Santa Barbara and San Luis Obispo counties have agreed to pay $22.5 million in settlement deals regarding allegations they violated federal and state law by submitting false bills to Medicaid.
Dignity Health reached the deal to pay $13.5 million to the U.S. government and $1.5 million to the state.
Dignity Health owns and operates Marian Regional Medical Center in Santa Maria, plus French Hospital Medical Center and Arroyo Grande Community Hospital in southern San Luis Obispo County. It also operates Pacific Coast Health Centers in both counties.
In a separate settlement, Tenet Healthcare, which runs Sierra Vista Regional Medical Center in San Luis Obispo and Twin Cities Community Hospital in Templeton, agreed to pay $6.4 million to the U.S. government and $750,000 to the state.
“These health care providers siphoned critical Medicaid funding for their own gain instead of using it to provide healthcare services to patients most in need,” said United States Attorney Martin Estrada. “These major settlements demonstrate our commitment to hold accountable healthcare providers that seek to exploit the Medicaid program and harm the American taxpayer.”
They were among multiple Central Coast health care organizations accused by a whistleblow of submitting improper claims.
The allegations were linked to Santa Barbara/San Luis Obispo Regional Health Authority or CenCal Health, the health system responsible for administering the Medi-Cal program in Santa Barbara and San Luis Obispo counties (Medicaid in California is called Medi-Cal).
Dignity Health provided assorted services in accordance with a previously established program and agreement.
“Under the program, Dignity Health submitted to CenCal Health detailed monthly reconciliation statements and annual reports, and was paid by CenCal in accordance with the agreements,” the company said in a statement. “As such, Dignity Health received fair market value compensation from CenCal for services actually provided to this vulnerable population, and maintains that all reimbursements were properly received.
“Dignity Health entered into a settlement agreement with the United States and State of California to resolve the matter without the expense of litigation, and without admitting any liability.”
The allegations were related to Medicaid Adult Expansion under the Patient Protection and Affordable Care Act (ACA).
The two settlements resolve allegations healthcare firms submitted false claims to Medi-Cal for “Enhanced Services” that Dignity Health provided to some CenCal patients between Feb. 1, 2015, and June 30, 2016, and that Twin Cities and Sierra Vista provided between Jan. 1, 2014, and April 30, 2015.
Federal and state regulators contend the payments were not “allowed medical expenses” permissible under the contract between the California Department of Health Care Services and county-organized health system, CenCal Health in this case.
They also maintained the charges had various flaws including that the pre-determined amounts did not reflect the fair market value of any Enhanced Services provided or duplicated already required services.
The civil settlements resolve claims brought under federal whistleblower laws by Julio Bordas, the former medical director of the CenCal Health that contracted with Dignity, Twin Cities and Sierra Vista for the provision of health care services under Medi-Cal, U.S. officials said.
Under the act, someone can file an action on behalf of the United States and receive a portion of any recovery. Bordas will receive $3.9 million as his share of the federal recovery, according to the U.S. Attorney’s Office.
In October, Santa Barbara County reached a settlement with the Department of Justice regarding Medi-Cal billing.