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…