DOJ Settles Medicaid Fraud Claims With Florida’s BayCare Health for $20 Million
The Department of Justice has demonstrated a renewed vigor in pursuing healthcare fraud investigations in recent years. The DOJ boasts that it has recovered more than $149 million in 2022 just in COVID-19-related fraud actions. In 2021, they pursued actions totaling more than $1.4 billion in alleged losses. The DOJ’s recent settlement with BayCare Health System Inc. illustrates the government’s focus on rooting out instances of healthcare fraud nationwide.
The DOJ’s investigation targeted BayCare and affiliates operating four hospitals in Florida. BayCare allegedly engaged in a practice of submitting false claims through Florida’s Medicaid program. Florida’s Medicaid program is jointly operated by the state and federal governments. The state or a local entity is supposed to donate funds into the state’s Medicaid pot, and those donations are then matched by the federal government. Pursuant to federal law, Florida’s share of Medicaid payments must come from a state or local entity, not from a private health care provider.
As alleged by the DOJ, between October 2013 and September 2015 the Tampa Bay hospital chain made a number of non-bona fide donations to a local county welfare board. The welfare board would transfer a portion of those cash donations to the State of Florida’s Medicaid program. Those transferred funds were then matched by the federal government. Based on the alleged backdoor agreement between BayCare and the welfare agency, the matching funds were then returned to the BayCare hospitals as Medicaid payments.
Through this system of improper donations, BayCare would recoup its original donation as well as the federal matching funds, and the state would not have actually contributed any funds to its Medicaid program at all. BayCare effectively “paid themselves to increase federal matching funding on Medicaid patients and paid the a ten percent fee in order to accomplish the scheme.” As explained by the DOJ: “This unlawful conduct causes federal expenditures to increase without any corresponding increase in state expenditures, since the state share of the Medicaid payments to the provider comes from and is returned to the provider.” Because the “state” funds came from an improper source, they were not bonafide contributions and constituted false claims in violation of the False Claims Act.
Ultimately, BayCare agreed to pay $20 million to the government to settle the allegations. BayCare refused to admit any wrongdoing and expressly denied the allegations made by the Justice Department, but it did explain in a statement that it chose to resolve the matter in order to avoid the “delay, uncertainty, and expense of litigation” concerning a “complex regulatory question.”
The DOJ’s investigation into the scheme was precipitated by a whistleblower complaint brought by a former hospital reimbursement manager in Florida. The False Claims Act allows private parties to file an action on behalf of the United States and recoup a portion of any amounts recovered. For his part in commencing the BayCare action, the whistleblower will receive $25,000 from BayCare to cover litigation expenses as well as $5 million of the DOJ’s settlement proceeds. The DOJ continuously touts the importance of the False Claims Act and the importance of tips and complaints from all sources.
