Washington, DC— SVCMC Inc., formerly known as Saint Vincents Catholic Medical Centers of New York (“Saint Vincents”), one of six healthcare systems and medical clinics alleged to have fraudulently retained years of erroneously inflated government medical care payments, settled a Department of Justice lawsuit by agreeing to pay $29 million.
The allegations were first made in a whistleblower lawsuit filed by Phillips & Cohen LLP. The lawsuit alleged that six health systems and medical centers – of which Saint Vincents was one – and the alliance they established, defrauded the Department of Defense (DOD) out of hundreds of millions of dollars intended to provide health care to military retirees by retaining payments they knew the government paid in error.
The Department of Justice intervened against all defendants in the lawsuit. This settlement was reached shortly after the government filed its complaint in intervention; litigation against all of the other defendants is ongoing.
“The government’s methodical and thorough investigation and intervention resulted in the settlement with Saint Vincents,” said Amy Easton, a partner and whistleblower attorney at Phillips & Cohen. “We are fortunate to have such a strong team of DOJ lawyers tirelessly pursuing this case.”
The alleged fraud involved a unique government health program established by Congress in 1994, the Uniformed Services Family Health Plan (USFHP), which entrusted the health systems and medical centers to provide healthcare to more than 100,000 military personnel, retirees and their families, in 17 states, enrolled in the plan.
DOD payments to the healthcare defendants were pursuant to an agreed-upon formula which was based on many factors, including patients’ medical conditions. The lawsuit alleges that unbeknownst to DOD, from 2008 until 2012, a government contractor made two significant errors in calculating payments under the formula. These errors made patients appear sicker than they really were, causing DOD to pay the healthcare defendants hundreds of millions of dollars more than they were entitled to.
“The lawsuit alleges that the defendants were aware of these significant errors but chose to not disclose the impact of the errors to the government despite their obligation to do so. The Supreme Court’s century-old statement that ‘Men must turn square corners when they deal with the Government,’ certainly comes to mind,” said Jeffrey Dickstein, a whistleblower attorney and a Phillips & Cohen partner.
Phillips & Cohen LLP filed the underlying whistleblower lawsuit in 2016 alleging violations of the federal False Claims Act on behalf of whistleblowers Jane Rollinson, former interim Chief Financial Officer and Daniel Gregorie, former member of the Board of Trustees of Martin’s Point Healthcare, one of the six health system defendants.
“Ms. Rollinson and Dr. Gregorie thought it was important that DOD healthcare funds were used for healthcare for military families in accordance with the rules,” said Emily Stabile, a partner and whistleblower attorney at Phillips & Cohen. “We are proud to represent Ms. Rollinson and Dr. Gregorie, who had the courage to speak up about this important matter.”
The False Claims Act allows private citizens who know of entities and individuals defrauding the federal government to file lawsuits against them and recover funds on the government’s behalf. The law offers whistleblowers protection against job retaliation and rewards for their information and assistance. Whistleblowers are entitled to 15 percent to 25 percent of the recovery when the government joins the lawsuit.
James B. Haddow of the firm Petruccelli, Martin & Haddow, LLP in Portland, Maine serves as local counsel in this lawsuit.
The Department of Justice complaint is: United States ex rel. Rollinson et al. v. Martin’s Point Health Care et al. Case No. 2:16-cv-00447-NT (D. Me. 2016).