DOJ sues health plan that got almost $3.5 billion from Feds

(The Center Square) – The U.S. Attorney's Office for the Central District of California is suing a health insurance plan for allegedly violating the public's trust at taxpayers' expense.

The federal government filed the complaint Wednesday under the False Claims Act against Inland Empire Health Plan, which received nearly $3.5 billion under the Patient Protection and Affordable Care Act to extend coverage to newly eligible Californians receiving Medi-Cal. The suit was filed in the U.S. District Court for the Central District.

The health plan serves 1.5 million residents in inland Southern California's San Bernardino and Riverside counties, according to IEHP.

"The government's complaint alleges that IEHP violated the False Claims Act by making false statements to Medi-Cal and knowingly retaining overpayments," the U.S. Attorney's Office said in a news release.

The U.S. Department of Justice suit accuses IEHP of failing to keep its promise to return surplus funding to the federal government for a newly insured Medi-Cal Expansion population between Jan. 1, 2014 and June 30, 2016. Medi-Cal is California's Medicaid program.

"Instead of keeping that promise, IEHP illegally spent hundreds of millions of dollars of surplus funding in a fraudulent scheme designed to pad its own coffers," according to the 58-page lawsuit.

The Medi-Cal expansion covered adults between ages 19 and 64 without dependent children and with annual incomes of up to 133% of the federal poverty level. If IEHP didn't spend at least 85% of the funds on "allowed medical expenses," it was required to pay the difference to the state, which would then pay it back to the federal government, the U.S. Attorney's Office said.

In a statement Wednesday to media, IEHP said it strongly disagreed "with the DOJ allegations and is prepared to defend our efforts through the appropriate legal process."

The lawsuit said IEHP committed schemes falling in the categories of "(1) sham incentive programs and (2) an extra-contractual retroactive rate increase."

"To further these schemes, IEHP improperly spent money intended for the MCE population's medical expenses on attorneys, consultants, and technology contractors," according to the lawsuit. MCE stands for "Medi-Cal Expansion."

Acting U.S. Attorney Bill Essayli said the lawsuit shows his office's commitment to hold insurers accountable when they "brazenly compromise the Medicaid system.

"We will take every measure to restore integrity and accountability to the Medicaid system and ensure that patient care – not financial gain – is the primary focus of our health care system," Essayli said.

The suit illustrates the federal government's emphasis on combating health care fraud, the U.S. Attorney's Office said.

The U.S. Department of Health and Human Services welcomes information about potential fraud, waste, abuse and mismanagement at 1-800-HHS-TIPS (800-447-8477).