The DOJ announced in a press release on April 6, 2022, that BayCare Health System Inc. and related entities have agreed to pay the United States $20 Million to settle a Qui Tam case brought by whistleblower, Larry Bomar. Mr. Bomar is a former hospital reimbursement manager and will receive a bounty of just over $5 Million as his share of the settlement.
Here is the scheme that led to the big payout. BayCare made donations to the Juvenile Welfare Board of Pinellas County (JWB). It did so to fund the state’s share of Medicaid payments to BayCare. The Florida Medicaid program provides medical assistance to low-income individuals and individuals with disabilities, and is jointly funded by the federal and state governments. What’s wrong with that you might ask? Here’s the subtle part. Under federal law, Florida’s share of Medicaid payments must consist of state or local government funds, and not “non-bona fide donations” from private health care providers, such as hospitals. That’s because the donations are then paid right back to the donating hospitals. Again, you might well ask, what’s wrong with that? Or conversely, why would a hospital ever do that, if there is no gain? The DOJ says this even-wash payment/repayment maneuver is prohibited by Medicaid in order is to give the State of Florida an incentive to curb Medicaid costs and prevent unnecessary services. That line of reasoning may be somewhat surprising to some.
In this case the DOJ alleged that between October 2013 and September 2015, BayCare knowingly caused false claims for federal Medicaid matching funds to be submitted to the United States. Specifically, that during this time, BayCare made improper, non-bona fide cash donations to JWB knowing that JWB would and then did transfer a portion of the cash donations to the State of Florida’s Agency for Health Care Administration for Florida’s Medicaid Program. The funds transferred by JWB to the state were “matched” by the federal government before being returned to the BayCare hospitals as Medicaid payments, and BayCare was thus able to recoup its original donations to JWB and also receive federal matching funds, in violation of the federal prohibition on non-bona fide donations. BayCare’s donations to JWB increased Medicaid payments received by BayCare, without any actual expenditure of state or local funds.
The Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division, stated:
Medicaid is a partnership between the federal government and state governments. When the federal government provides Medicaid matching funds, there must be a corresponding expenditure by the state or a local unit of government. When private parties make unlawful, non-bona fide donations to state or local governments, they undermine a key safeguard for ensuring the integrity of the Medicaid program.
U.S. Attorney Roger B. Handberg for the Middle District of Florida, went on to say:
“Millions of Floridians depend on the Medicaid Program for medical care and related services. Our office is committed to protecting the integrity of the Medicaid Program, and we will use all available civil remedies to recover the ill-gotten gains obtained by those who defraud it and other government health care programs.
The Special Agent in Charge, Omar Pérez Aybar of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG), said:
When health care providers participate in fraud schemes to boost federal payments, they do so at the expense of federal health care programs. Our agents will continue to coordinate with our law enforcement partners to root out health care fraud and hold bad actors accountable for their actions.
The Baycare settlement includes the resolution of all claims brought by the qui tam Relator, Larry Bomar, under the False Claims Act, on behalf of the government. The qui tam case he started is captioned United States ex rel. Bomar v. Bayfront HMA Medical Center LLC, et al., Civil Action No. 8:16-cv-03310-MSS-JSS (M.D Fla.). As mentioned, Mr. Bomar will receive $5 Million as his share of the settlement.
The DOJ press release goes on to conclude, which hospitals would be well advised to take as a warning, that:
The investigation and resolution of this matter illustrates the government’s emphasis on combating healthcare fraud. One of the most powerful tools in this effort is the False Claims Act.
The final terms of the settlement provide in part as follows:
1. BayCare shall pay to the United States $20,000,000 (“Settlement Amount”), of which $10,000,000 is restitution, and interest on the Settlement Amount at a rate of 1.625% per annum from January 14, 2022 until paid no later than 14 days after the Effective Date of this Agreement by electronic funds transfer pursuant to written instructions to be provided by the Civil Division of the United States Department of Justice.
2. Conditioned upon the United States receiving the Settlement Amount and as soon as feasible after receipt, the United States shall pay $5,000,000 to Relator by electronic funds transfer (“Relator’s Share”).
Private health care providers and potential whistleblowers alike would be well advised to be on the lookout for such potentially liable “non-bona fide donations” that come right back as Medicaid payments. It is a tricky area of the law and the potential treble-damage liability under the False Claims Act, as well as remedial measures the government may require, can be very significant. The parties should seek competent legal counsel for these difficult issues.