California DOJ Sues Inland Empire Health Plan Over Alleged False Claims

On Wednesday, September 17th, the California Department of Justice filed a lawsuit against the Inland Empire’s Health Plan, claiming that the organization submitted a false claim to MEDI-CAL.

The lawsuit was filed in the Central District of California and alleges violations of federal false claims law.

IEHP, as it’s commonly known, contracts with the California Department of Healthcare Services to provide services to residents in San Bernardino and Riverside counties as part of the state’s Medicaid program, Medi-Cal.

Bill Essay from the DOJ remarked, “This lawsuit shows our commitment to holding insurance companies accountable, especially when it comes to the Medicaid system. We aim to ensure that patient care is the priority, rather than financial gains.”

IEHP Responds to Lawsuit

The representatives of IEHP have denied any allegations of fraud.

In their written response, they stated, “IEHP firmly opposes the DOJ’s claims and is prepared to defend our position in court.”

Winston Chan, a lawyer representing IEHP from Gibson, Dunn & Crutcher LLP, described the complaint as without merit.

He added, “This misguided legal action from the federal government appears to challenge Medi-Cal health benefits that were paid a decade ago, which were fully disclosed and approved. The allegations are misguided, attempting to revise history, particularly in light of broader federal scrutiny of state Medicaid funds.”

Chan also highlighted that California did not join the federal government as plaintiffs in this lawsuit.

He expressed skepticism about the allegations, questioning whether IEHP or its staff mismanaged the funds meant for health care providers serving the most vulnerable Californians.

Details of the Allegations

The federal lawsuit claims that IEHP filed inaccurate statements with Medi-Cal and deliberately reported an overpayment. Following Medi-Cal’s expansion in 2014, the initial three years of the program were fully funded by the federal government.

Under contracts with state authorities, if IEHP spent less than 85% of the funds on permissible healthcare expenses, they would need to pay back that amount along with any difference in actual spending. Subsequently, the state would return those funds to the federal government.

The DOJ’s statement alleges that IEHP created a scheme to misuse surplus MEDI-CAL expansion funds, focusing on two main areas: (1) false incentive programs and (2) inflated contractual retroactive rates.

Additionally, prosecutors accuse the organization of misallocating funds for “improper purposes,” including administrative costs, and noted that federal funds were distributed inappropriately.

The complaint alleges that officials at IEHP “deceived the state” through “false statements” and mismanaged over $320 million in federal funds that should be returned.

Deputy Attorney Brenna Jenny emphasized the importance of Medicaid services, stating that the current complaint underscores a need to protect taxpayer dollars and the integrity of the Medicaid program.