State of California Settles Whistleblower Suit Alleging Fraud in Contraceptive Products and Services

Arnold Law Firm: Whistleblowers Help the California Department of Justice and California Department of Insurance to Recover $18.275 Million

SACRAMENTO, Calif., Feb. 7, 2023 /PRNewswire/ -- M. Anderson Berry with the Arnold Law Firm and Michael A. Hirst with the Hirst Law Group provided counsel for the two whistleblowers, both former employees of The Pill Club (also called "Favor"), who brought fraud allegations against the company, alleging that it defrauded government and private insurers by submitting false claims for contraceptive prescriptions and services that were knowingly in violation of law. The Court unsealed the case today in accordance with the terms of settlement agreements entered into between The Pill Club, the California Department of Justice ("DOJ"), the California Department of Insurance ("CDI"), and the whistleblowers.

Under the terms of the settlement agreements, The Pill Club ("TPC") agreed to pay $15 million to DOJ and $3.275 million to CDI.

Cindy Swintelski Schwartz and Happy Baumann, both former nurse practitioners at TPC, filed the complaint under seal in March 2019 pursuant to the California False Claims Act ("FCA") and the California Insurance Fraud Prevention Act ("IFPA"). They alleged that the company knowingly and routinely defrauded public and private insurers by failing to provide required physician supervision for contraceptive services and by over-billing for contraceptive products.

Among the allegations resolved in the settlement agreements were contentions that TPC: (1) billed for female condoms in excess of what was medically necessary; (2) billed for emergency contraceptives in excess of what was medically necessary; (3) billed for improperly coded telemedicine visits; (4) used billing codes that inaccurately reflected the amount of time providers spent with patients; (5) used place of service modifiers that falsely indicated an in-person visit occurred at a healthcare provider's office, and (6) billed for prescriptions dispensed by a pharmacy not licensed to provide pharmacy services to California patients.      

Ms. Schwartz and Ms. Baumann will share in the payments received as part of a whistleblower award under both the FCA and IFPA. The whistleblowers and their attorneys will receive over $4.59 million from the funds collected by DOJ and CDI.

Attorney Michael A. Hirst of Hirst Law Group stated: "Ms. Schwartz and Ms. Baumann are being rewarded for their courage in reporting conduct that they knew was wrong and needed to be stopped. Women deserve safe and effective contraceptives provided with their best interests in mind, not the financial interests of a contraceptive prescriber and dispenser. By blowing the whistle, Ms. Baumann and Ms. Schwartz have saved public and private insurers millions of dollars."

Attorney Anderson Berry of the Arnold Law Firm added: "Ms. Baumann and Ms. Schwartz stood up for what is right. I hope more medical professionals in this field stand up and let us know who else is committing these frauds against women and their government or private insurers."

Berry and Hirst praised California's efforts in investigating the case and working to ensure the integrity of public and private health care funds.  The case was investigated for DOJ by Deputy Attorneys General Jennifer S.  Gregory and Jeanette H. Calinsky, California Department of Justice,

Division of Medi-Cal Fraud and Elder Abuse, Civil Prosecutions Unit, and for CDI by False Claims Trial Attorney Mitch Neumeister, California Department of Insurance, Fraud Liaison Bureau, in Sacramento, CA.

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SOURCE Arnold Law Firm