The U.S. government has initiated legal action against six health plans and their associated trade group participating in A Department Od Defense Dod Health Care Program For Uniformed personnel and their families. The lawsuit alleges violations of the False Claims Act, accusing these entities of knowingly retaining inflated payments for healthcare services provided under the Uniformed Services Family Health Plan (USFHP). Adding to the legal developments, a settlement has been reached with Kennell & Associates Inc., a Department of Defense (DOD) contractor, in connection with related conduct.
The USFHP stands as a vital healthcare option within the military community, offering comprehensive coverage to military personnel, retirees, and their families. Six health plans are currently under scrutiny as defendants in the government’s complaint. These include Brighton Marine Health Center, CHRISTUS Health Services, Johns Hopkins Medical Services Corporation, Martin’s Point Health Care, Pacific Medical Center, and St. Vincent’s Catholic Medical Centers of New York.
According to the complaint, the crux of the issue revolves around payment rates within the USFHP program. The DOD compensates these plans through capitated rates to ensure healthcare access for enrollees. However, in June 2012, a critical discovery was made: calculation errors had led to inflated rates in previous years. Despite becoming aware of these overpayments, the health plans allegedly engaged in actions to conceal this information from the government. Furthermore, they continued to submit invoices based on these erroneously inflated payment rates. The complaint further details that during subsequent rate negotiations, some plans even requested the government to maintain the inflated rates, even with full knowledge of the underlying errors.
Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division, emphasized the gravity of the situation, stating, “Contractors have an obligation to return overpayments, and we will hold accountable contractors that knowingly and improperly retain such funds.” He further asserted the commitment to fiscal responsibility, adding, “We are committed to ensuring that taxpayer funds for healthcare services to military members and their families are actually used for that purpose, not to enrich those charged with administering the program.”
Echoing this sentiment, Acting Special Agent in Charge Brian J. Solecki of the DCIS Northeast Field Office, the law enforcement arm of the Department of Defense Office of Inspector General, highlighted the priority of safeguarding military healthcare integrity. “Protecting the integrity of the healthcare system for our military members and their families, is a top priority of the Defense Criminal Investigative Service (DCIS),” Solecki stated. He affirmed the DOD’s expectations of contractual compliance and DCIS’s dedication to accountability, “The DOD expects companies to adhere to contract requirements and DCIS will continue to work with our law enforcement partners and the Justice Department to hold DOD contractors who engage in fraudulent activity at the expense of the U.S. military accountable for their actions.”
The legal proceedings originated from a qui tam lawsuit, initiated under the whistleblower provisions of the False Claims Act by Jane Rollinson and Daniel Gregorie in the District of Maine. Jane Rollinson’s experience as Interim Chief Financial Officer at Martin’s Point Health Care from 2007 to 2015, combined with Daniel Gregorie’s role as a consultant and later Board of Trustees member at the same institution, provided them with inside knowledge. The False Claims Act empowers private citizens to file lawsuits on behalf of the United States and potentially receive a portion of any recovered funds. The government retains the option to intervene in such cases, as demonstrated in this instance. The case is formally captioned United States ex rel. Rollinson v. Martin’s Point Health Care Inc., No. 2:16-cv-00447-NT.
In a parallel development, the United States reached a settlement agreement with Kennell and Associates Inc., a consulting firm specializing in actuarial services for the Defense Health Agency (DHA) concerning the USFHP program. The settlement addresses allegations that Kennell & Associates failed to adequately inform DHA about errors in the rate-setting methodology, which led to inflated USFHP rates and consequently, overstated payments to the health plans. Under the settlement terms, Kennell & Associates is obligated to pay the United States $779,951, plus interest, along with contingent payments based on future revenue and cash reserves through 2025. The settlement amount reflects the firm’s financial capacity to pay.
The investigation was a collaborative effort spearheaded by the Civil Division’s Commercial Litigation Branch, Fraud Section, and the U.S. Attorney’s Office for the District of Maine, with crucial support from DHA. Attorneys Diana Cieslak, Evan Ballan, and Amy Kossak from the Civil Division’s Fraud Section, alongside Assistant U.S. Attorneys Andrew Lizotte and Sheila Sawyer for the District of Maine, are actively litigating the case.
The government’s intervention in this case underscores its strong commitment to combating health care fraud, particularly within programs like a department od defense dod health care program for uniformed services. The False Claims Act serves as a powerful instrument in this fight. Individuals with information regarding potential fraud, waste, abuse, or mismanagement within the Department of Health and Human Services are encouraged to report it through the HHS hotline at 800-HHS-TIPS (800-447-8477).
It is important to note that the claims presented in the complaint and settlement agreement are allegations. No determination of liability has been made at this stage.
