The Justice Department has leveled a lawsuit against six health plans and their collective trade group, alleging the companies overcharged the military's health care program by over $300 million and kept the extra money instead of returning it.
The case centers on the Uniformed Services Family Health Plan (USFHP) program, a key health care service for military personnel, retirees, and their families.
The federal complaint, spoken about by the Justice Department in a press release issued Wednesday, accuses the health plans and the US Family Health Plan Alliance of exploiting errors in the payment calculations of the USFHP program after discovering in June 2012 that they had been receiving overpayments.
Instead of notifying the Department of Defense (DoD), it is alleged the plans—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—concealed the information, violating the False Claims Act.
Their alleged actions deprived the DoD—and ultimately American taxpayers—of funds intended to support military health care services, pointing to a profound misuse of resources dedicated to the welfare of military families, it is claimed.
Newsweek contacted all six plans plus the US Family Health Plan Alliance by email on Thursday for comment.
"Contractors have an obligation to return overpayments, and we will hold accountable contractors that knowingly and improperly retain such funds," Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department's Civil Division, said in a public statement. "We are committed to ensuring that taxpayer funds for health care services to military members and their families are actually used for that purpose, not to enrich those charged with administering the program."
Newsweek reached out to the Justice Department on Thursday morning via its media inquiry page for comment.
The implicated health plans were part of a capitation payment system with the DoD, receiving set amounts per enrollee which were not to exceed statutory payment limitations. However, due to two specific errors in calculating the payments for beneficiaries over the age of 65, payments were significantly inflated, leading to what the Justice Department claims were unjust earnings for the plans.
Notably, the errors that led to the inflated payments were not initially recognized by anyone, including the DoD or the plans, until 2012. At that point, actuarial consultants hired by the DoD and the plans identified the mistakes.
According to court documents, this crucial information about historical overpayments, resulting from what the complaint refers to as the "Filtering Error" and "Prospective Error," was not shared with the government, preventing any action to recover the overpaid funds. This meant the plans were collectively overpaid by over $300 million between 2008 and 2012.
In response to discovering the errors, the lawsuit alleges that the health plans knowingly retained the funds—and, rather than adjusting their billing practices, some plans sought to maintain the inflated payment rates during negotiations for subsequent years, according to the Justice Department.
By filing the lawsuit, the U.S. aims to recover treble damages and civil penalties for violations of the False Claims Act, as well as seek restitution for breach of contract, unjust enrichment, and payment by mistake.
A settlement has already been reached with Kennell & Associates Inc., the consulting firm that was implicated in the rate-setting errors, agreeing to pay the U.S. $779,951, plus interest, and contingent payments based on future revenue and cash reserves.
The case was initially brought under whistleblower provisions by Jane Rollinson and Daniel Gregorie. The Justice Department said in the press release that the case points to the government's resolve in addressing and rectifying financial malfeasance affecting critical services for military families.
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Aj Fabino is a Newsweek reporter based in Chicago. His focus is reporting on Economy & Finance. Aj joined Newsweek ... Read more
