OAKLAND — California Attorney General Rob Bonta, in partnership with the U.S. Department of Justice, today secured three settlements totaling $70.7 million against a Southern California County Organized Health System, Gold Coast Health Plan (Gold Coast), and three Medi-Cal providers: Dignity Health (Dignity), Clinicas del Camino Real, Inc. (Clinicas), and Ventura County, the owner and operator of Ventura County Medical Center, for submitting fraudulent claims to Medi-Cal in violation of the state and federal False Claims Acts. The settlements resolve allegations that Gold Coast, Dignity, Clinicas, and Ventura County submitted false claims in an organized scheme to wrongfully retain federal funds intended for Medicaid Adult Expansion under the Affordable Care Act (ACA). Today’s settlements amount to a total of $70.7 million total, with the state of California receiving $2.45 million, plus accrued interest.
“Medi-Cal props up our communities by providing access to free or affordable healthcare services for millions of Californians and their families. Those who attempt to cheat the system are cheating our communities of essential care,” said California Attorney General Bonta. “I want to express my gratitude to the United States Department of Justice and the United States Attorney’s Office in Los Angeles for their extensive efforts throughout the course of this investigation. The California Department of Justice and our law enforcement partners will continue to hold accountable those who defraud the Medi-Cal program, and protect those it serves.”
Pursuant to the ACA, beginning in January 2014, Medi-Cal was expanded to cover the previously uninsured “Adult Expansion” (AE) population—adults between the ages of 19 and 64 without dependent children with annual incomes up to 133 percent of the federal poverty level. The federal government fully funded the expansion coverage for the first three years of the program. The AE program was intentionally overfunded to provide a substantial cushion to cover any additional medical needs this newly insured population of patients might present. Through its contract with the California Department of Health Services (DHCS), Gold Coast agreed that if it did not spend at least 85% of what it received for the AE population on eligible services, the surplus funds would be returned to the Medi-Cal program. California, in turn, was required to return that amount to the federal government.
The three settlements resolve allegations that Gold Coast, Ventura County, Dignity, and Clinicas knowingly submitted or caused the submission of false claims to Medi-Cal for “Additional Services” provided to Adult Expansion Medi-Cal members between January 1, 2014, and May 31, 2015. California and the United States alleged that the payments were not “allowed medical expenses” under Gold Coast’s contract with DHCS, were pre-determined amounts that did not reflect the fair market value of any Additional Services provided, and/or the Additional Services were duplicative of services already required to be rendered.
As a result of the settlements, Gold Coast will pay $17.2 million to the United States; Ventura County will pay $29 million to the United States; Dignity will pay $10.8 million to the United States and $1.2 million to the State of California; and Clinicas will pay $11.25 million to the United States and $1.25 million to the State of California.
The settlements include the resolution of claims brought under the qui tam or whistleblower provisions of the California False Claims Act by Atul Maithel, Gold Coast’s former controller, and Andre Galvan, Gold Coast’s former director of member services. Under those provisions, a private party can file an action on behalf of California and receive a portion of any recovery.
This investigation was made possible through collaboration with the United States Department of Justice and the United States Attorney’s Office for the Central District of California.
The California Department of Justice’s DMFEA protects Californians by investigating and prosecuting those who defraud the Medi-Cal program as well as those who commit elder abuse. These settlements are made possible only through the coordination and collaboration of governmental agencies, as well as the critical help from whistleblowers who report incidences of abuse or Medi-Cal fraud at oag.ca.gov/dmfea/reporting.
DMFEA receives 75% of its funding from HHS under a grant award totaling $50,522,020 for federal fiscal year 2021-2022. The remaining 25% is funded by the State of California. The federal fiscal year is defined as October 1, 2021, through September 30, 2022.