The Department of Justice has filed a False Claims Act lawsuit against Inland Empire Health Plan (IEHP), alleging the Rancho Cucamonga, Calif.-based insurer misused federal Medicaid expansion funds and submitted false statements to the state.
The Sept. 17 complaint was filed in the Central District of California and accuses IEHP of knowingly retaining overpayments and disguising improper spending as legitimate medical expenses. IEHP contracts with the state to provide Medi-Cal coverage in Riverside and San Bernardino counties. Under that arrangement, the plan was required to spend at least 85% of Medicaid expansion funds on allowed medical expenses or return the difference to the state, which would then repay the federal government.
According to the lawsuit, IEHP instead developed schemes to avoid repayment, including what prosecutors called sham incentive programs and a retroactive rate increase outside its contract. The government alleges IEHP used surplus funds for unauthorized purposes, such as administrative costs, other patient populations and payments that provided no value in return. To conceal the spending, the complaint says IEHP submitted false reports to the state that were relayed to federal officials, while internally admitting it was giving providers “free money.” Payments for consultants and technology services were allegedly disguised as incentive payments and in some cases backdated to earlier reporting periods.
The complaint is arguing that the alleged conduct violated IEHP’s contractual obligations and enriched the plan at taxpayer expense.
“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 DOJ release. “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 an online statement, IEHP said it was aware of the complaint and “strongly disagrees with the DOJ allegations and is prepared to defend our efforts through the appropriate legal process.”
IEHP’s legal counsel shared the following statement:
“Through this misguided civil legal dispute, the federal government is trying to contest Medi-Cal health benefits paid out a decade ago and that were previously disclosed to and approved by regulators, with full transparency. The allegations are a brazen attempt at revisionist history that is not only wrong as to the facts and law, but also particularly galling in light of the federal government’s wider attacks on state Medicaid funding. Conspicuously absent from the lawsuit—which the state of California did not join as a co-plaintiff—is any allegation whatsoever that Inland Empire Health Plan or its personnel retained any of the funds in question or that providers serving the neediest Californians did not actually receive every dollar awarded to them. We look forward to taking this case to court and exposing the mistaken assumptions, flawed reasoning, and false conjecture that is rife throughout the allegations, and ensuring that our client is not distracted from its not-for-profit mission to heal and inspire its 1.5 million underserved members in Riverside and San Bernardino counties.”
