Inland Empire health insurer made false claims to hoard Medi-Cal money, lawsuit alleges

An Inland Empire public agency overseeing a government-run health insurance program lied in order to keep money it wasn’t entitled to, alleges a lawsuit filed by the U.S. Department of Justice.

Department officials on Wednesday, Sept. 17, announced a lawsuit filed in federal court against Inland Empire Health Plan that alleges it broke federal law by making false claims regarding Medi-Cal, the state’s version of the federal Medicaid program that provides health coverage to the poor and disabled.

“Today’s lawsuit against IEHP shows our steadfast commitment to hold accountable insurers that brazenly compromise the Medicaid system,” Acting U.S. Attorney Bill Essayli said in a news release.

He added: “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.”

In a brief statement issued Wednesday night, the health plan said it “strongly disagrees with the DOJ allegations and is prepared to defend our efforts through the appropriate legal process.”

“For nearly 30 years, IEHP has created access to care for underserved populations in Riverside and San Bernardino Counties,” the statement says. “We remain committed in our mission to heal and inspire the human spirit” for members.

Based in Rancho Cucamonga and run by a governing board that includes county supervisors in Riverside and San Bernardino counties, the nonprofit health plan insures more than 1.8 million Inland residents.

As of June, 4 in 10 Inland residents were on Medi-Cal, though not all of them are enrolled through the health plan that is being sued.

According to the justice department’s release, the health plan “developed schemes to misuse” Medi-Cal funding made available through a 2014 expansion of the program to serve low-income 19- to 64-year-olds without dependent children.

The health plan “misspent” expansion funding “for impermissible purposes,” including administrative expenses and “simply giving away federal funding in exchange for no value in return,” the release alleges.

The health plan “was motivated by a desire to conserve its other funding, thus enriching itself,” the release states.

To make the spending appear legitimate, the health plan deceived the state “about the nature, timing, and purpose of its payments to providers,” the release alleges. It also disguised payment for consultants and technology services that were not “allowed medical expenses,” according to the release.

The lawsuit seeks unspecified damages.

The litigation comes as the health plan and other Inland health care providers process changes to Medicaid resulting from the One Big Beautiful Bill Act signed earlier this year by President Donald Trump.

Critics say the bill will cause millions of Americans to lose their health insurance. In August, health plan CEO Jarrod McNaughton said that at least 300,000 in Riverside and San Bernardino counties could lose Medi-Cal coverage in the next few years due to Medi-Cal changes.

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