County-organized health system CenCal Health and three other healthcare providers agreed to pay a total of $68 million across settlements with the Department of Justice (DOJ) regarding alleged false claims submitted under California’s Medicaid program, Medi-Cal.
CenCal will pay $49.5 million, the DOJ announced in a press release Thursday. Among the other providers, not-for-profit hospital network Cottage Health System will pay $9 million, nonprofit outpatient clinic Sansum Clinic will pay $4.5 million, and nonprofit Community Health Centers of the Central Coast (CHC) will pay $3.15 million. An additional $1.85 million total will be paid back by the three providers to the state of California to round out the settlements.
The details: CenCal, Cottage, Sansum, and CHC “knowingly submitted or caused the submission” of false claims to Medi-Cal for services purportedly provided under the program’s “Adult Expansion” coverage, according to the DOJ. These alleged submissions, occurring across varied periods between 2014 and 2016, were not allowed medical expenses, pre-determined amounts that did not reflect the fair-market value of any services provided; and/or duplicative of services already required to be rendered, the DOJ alleged.
The agency, along with the state of California, alleged the payments were “unlawful gifts of public funds” in violation of the state’s Constitution.
Compliance considerations: The claims against the health system and providers were initially brought under the qui tam provisions of the False Claims Act by Julio Bordas, CenCal’s former medical director. Bordas will receive approximately $12.56 million of the settlement total.
Company response: “CenCal disagrees with the government’s position: We believe these past disbursements to providers under this program were lawful and proper and made in good faith within the context of minimal regulatory guidance,” the company said in a statement. “Regardless, we agreed to settle and put this matter behind us, allowing us to refocus on our mission: improving the health and well-being of the people we serve by providing access to high-quality health services.”
“Cottage received fair-market value compensation for the services provided and maintains that all payments were properly received,” said the provider in an emailed statement. “Cottage Health is committed to providing the highest quality care to improve the health of our communities through our core values of excellence, integrity, and compassion.
Sansum and CHC could not be reached for comment. CenCal, Cottage, Sansum, and CHC agreed to the settlements without admitting liability.