AG Hill Announces $18 Million Settlement In Medicaid Fraud Case Against Indiana University

AG Hill Announces $18 Million Settlement In Medicaid Fraud Case Against Indiana University

INDIANAPOLIS - Indiana Attorney General Curtis Hill today announced that his office entered into an $18 million settlement agreement with Indiana University Health Inc. and HealthNet Inc. that resolves a whistleblower lawsuit alleging, among other things, that various financial arrangements between IU Health and HealthNet violated multiple laws.

Specifically, laws alleged to be violated are the federal Anti-Kickback Statute, the federal False Claims Act and the Indiana False Claims Act. These violations occurred May 1, 2013, through August 30, 2016 – a span during which IU Health provided an interest-free line of credit to HealthNet. At least one purpose of this line of credit, it is alleged, was to induce HealthNet to refer its obstetrics and gynecology (OB/GYN) patients to IU Health’s Methodist Hospital.

HealthNet is designated as a federally qualified health center (FQHC), and it operates medical clinics within the state of Indiana. Under existing agreements, IU Health OB/GYN practitioners have regularly provided services within the confines of HealthNet clinics, officials said. But officials allege that those practitioners habitually – as part of the improper arrangements – directed patients to IU Health facilities for further treatment (such as labor and delivery services) rather than explain, as they are required to do, that the patients have options.

The Anti-Kickback Statute prohibits an entity from offering or paying money to induce another entity to refer a patient to a provider for products or services for which payment may be made in whole or in part under a federal health care program such as Medicaid. The law is intended to ensure that health care provided to beneficiaries of the public health insurance programs results from sound medical judgment rather than illegal kickbacks.

As a result of this conduct, the United States and the State of Indiana contended that the claims for services provided to OB/GYN patients referred by HealthNet to IU Health during the relevant time period were false or fraudulent. Attorney General Curtis Hill expressed disappointment in the actions of the companies involved in the settlement.

“When public funds are designated to benefit those who are most vulnerable, companies receiving those funds have a special obligation to act in good faith,” Hill said. “The arrangement between IU Health and HealthNet took advantage of Hoosiers on Medicaid by limiting their healthcare options exclusively to those within the IU Health Network, contriving a system that benefited only IU Health. This settlement will allow us to move forward from this unfortunate chapter.”

In addition to alleging that the financial arrangements between IU Health and HealthNet violated the Anti-Kickback Statute, the lawsuit also alleged that HealthNet violated the federal False Claims Act and the Indiana False Claims Act by improperly billing for services involving high-risk pregnancies that were provided by certified nurse midwives rather than physicians.

The lawsuit also alleged that HealthNet violated the federal False Claims Act in the submission of some of the claims to receive FQHC supplemental payments – payments that are made by the Medicaid program to FQHCs to ensure that FQHCs, when they contract with a managed care organization, receive the same reimbursement as if the claim were submitted directly to the State Medicaid Agency under a fee-for-service system.

Further, officials contend that the balance of the line of credit consistently exceeded any amount permitted under the Affiliation Agreement in place between IU Health and HealthNet – and HealthNet was repeatedly allowed to draw money on this line of credit in an amount that has consistently exceeded the line of credit by sums over $10 million, of which HealthNet was not expected to substantially repay the balance due.

The state’s share of the settlement will be $7.78 million. Settlement amounts were based on the state’s share of the cost of the Indiana Medicaid program and were enhanced for Indiana because the state’s False Claims Act is as effective as the federal statute.

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