Last Friday (February 14), Saint Vincents Catholic Medical Centers of New York (now known as SVCMC Inc.) agreed to pay $29 million to settle Department of Justice (DOJ) and whistleblower charges of violating the False Claims Act by keeping overpayments from the Department of Defense (DOD) for healthcare services to retired military members and their families.

Saint Vincents is one of six health plans in DOD’s Uniformed Services Family Health Plan program, which provides healthcare services to military personnel, retirees, and their families.  Under the program, DOD’s Defense Health Agency pays the participating plans capitated rates per individual enrollee subject to a statutory cap.  The other participating plans in the program include Brighton Marine Health Center, Christus Health Services, Johns Hopkins Medical Services Corporation, Martin’s Point Health Care, and Pacific Medical Center.

According to the government, Saint Vincents and the other participating health plans learned the government was substantially overpaying them under the program because of errors it had made in calculating the capitated rates.  But Saint Vincents and the other plans allegedly failed to repay the overpayments or notify the government of the issue.  Rather, they allegedly took steps to conceal the problem, continued to bill the government at the inflated rates, and conspired to avoid paying any of the money back.  The government claims the total overcharges at issue amount to roughly $300 million.

This settlement just resolves the claims against Saint Vincents.  The government is continuing to pursue its claims against the other plans.

The False Claims Act was enacted during the Civil War to go after war profiteers trying to defraud the Union Army.  It has long since become the government’s most potent fraud fighting tool.  It covers virtually any kind of fraud causing financial loss to the government.  This can be from overcharging the government, selling the government defective or substandard goods or services, or failing to comply with key contract terms or regulatory requirements.  It can also involve failing to return overpayments as is the case here.

The government highlighted this aspect of the statute in announcing the settlement, with Acting DOJ Civil Chief Brett Shumate stating that “those who receive public funds, including participants in government health care programs, must return funds to which they are not entitled.”  He further warned that “together with our partners across the federal government, we will hold accountable those who knowingly violate this obligation to the American taxpayers.”

Constantine Cannon whistleblower partner Gordon Schnell remarked that “while most False Claims Act cases involve overcharging the government, the statute also covers improperly retaining government overpayments or withholding amounts owed to the government.”  This applies even if there is no fraud or wrongdoing associated with the money owed.  According to Schnell, “once you learn you have money that belongs to the government, you are obligated to return it quickly.”

The allegations against Saint Vincents and the other health plans originated in a lawsuit filed by two whistleblowers under the qui tam provisions of the False Claims Act, which allow for private individuals to bring lawsuits on behalf of the United States against those that defraud the government.  In return, successful whistleblowers can recover up to 30% of any government recovery.

Here, the two whistleblower were previously associated with Martin’s Point Health Care, one of the participating plans the government sued.  Jane Rollinson was previously Interim CFO of the company and Daniel Gregorie was a consultant to the CEO and board of the company as well as a board member himself.  They will receive a whistleblower award of $5.655 million from the proceeds of the government’s recovery and will share in any future recoveries the government secures from its continued action against the remaining defendants.

Since 1986, when the False Claims Act was amended to increase the financial incentives and protections of whistleblowers, the government has recovered roughly $75 billion under the statute.  Roughly 70% of those recoveries ($53 billion) originated in actions brought by whistleblowers, for which they have received roughly $9 billion in whistleblower awards.

If you think you have information on potential fraud against the government and would like to learn more about what it means to be a False Claims Act whistleblower, please do not hesitate to contact us.  We will connect you with an experienced member of the Constantine Cannon whistleblower team for a free and confidential consultation.

Read Saint Vincents to Pay $29M to Settle False Claims Act Charges of Inflated Payments for Retired Military Care at constantinecannon.com