Florida’s BayCare Health System, hospital affiliates to pay $20 Million to settle False Claims Act allegations

FLORIDA — BayCare Health System Inc. and entities that operate four affiliated Florida hospitals (collectively BayCare) have agreed to pay the United States $20 million to resolve allegations that BayCare violated the False Claims Act by making donations to the Juvenile Welfare Board of Pinellas County (JWB) to improperly fund the state’s share of Medicaid payments to BayCare, the U.S. Department of Justice has announced.

The four hospitals are Morton Plant Hospital, Mease Countryside Hospital, Mease Dunedin Hospital and St. Anthony’s Hospital, according to the DOJ.

“Millions of Floridians depend on the Medicaid Program for medical care and related services,” said U.S. Attorney Roger B. Handberg for the Middle District of Florida.

“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.”

BayCare is a leading not-for-profit health care system that connects patients to a wide range of services at 15 hospitals and hundreds of other locations throughout the Tampa Bay and central Florida regions.

The United States 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, the United States alleged 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.

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.

A non-bona fide donation is a payment — in cash or in-kind — from a private provider to a governmental entity that is then returned to the private provider as the state share of Medicaid, the DOJ said.

The private provider’s donation triggers a corresponding federal expenditure for the federal share of Medicaid, which is also paid to the private provider. This unlawful conduct causes federal expenditures to increase without any corresponding increase in state expenditures, since the state share of the Medicaid payments to the provider comes from and is returned to the provider.

The prohibition of this practice ensures that states are in fact paying a share of Medicaid payments and thus have an incentive to curb Medicaid costs and prevent unnecessary services.

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, the DOJ said.

BayCare’s donations to JWB increased Medicaid payments received by BayCare, without any actual expenditure of state or local funds, according to the DOJ.

“When health care providers participate in fraud schemes to boost federal payments, they do so at the expense of federal health care programs,” said Special Agent in Charge Omar Pérez Aybar of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG).

“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 civil settlement includes the resolution of claims brought under the qui tam or whistleblower provisions of the False Claims Act by Larry Bomar, a former hospital reimbursement manager in Florida.

The resolution obtained in this matter was the result of a coordinated effort between the Justice Department’s Civil Division, Commercial Litigation Branch, Fraud Section and the U.S. Attorney’s Office for the Middle District of Florida, with assistance from HHS-OIG.

The matter was handled by Civil Division Fraud Section Attorneys Alison B. Rousseau and Jonathan T. Thrope and Assistant U.S. Attorney Carolyn B. Tapie for the Middle District of Florida.

The claims resolved by the settlement are allegations only and there has been no determination of liability.