SVCMC Inc, formerly known as Saint Vincents Catholic Medical Centers of New York, has agreed to pay $29m to resolve allegations that it violated the False Claims Act (FCA) by knowingly retaining erroneously inflated payments received from the Department of Defense for healthcare services provided to retired military members and their families.

Saint Vincent’s is one of six health plans participating in the Uniformed Services Family Health Plan (USFHP) program, which is a federal health insurance program funded by the Defense Health Agency (DHA), a component of the Department of Defense. Under the USFHP program, DHA pays the Saint Vincent plan capitated rates to provide healthcare services to military personnel, retirees, and their families.

The complaint

The complaint alleged that, in 2012, the company learned that errors had been made in the calculation of the capitated rates resulting in substantial overpayments to Saint Vincent’s and the other five USFHP plans over the preceding four years.

According to the government’s complaint, instead of notifying the government of the overpayments or repaying the funds, Saint Vincent’s, along with the other five USFHP plans, took steps to conceal the existence of the overpayments from DHA, continued to submit invoices at the inflated payment rates, and conspired to avoid paying the money back.

“Those who receive public funds, including participants in government health care programs, must return funds to which they are not entitled,” said Acting Assistant Attorney General Brett A Shumate, head of the Justice Department’s Civil Division. “Together with our partners across the federal government, we will hold accountable those who knowingly violate this obligation to the American taxpayers.”

The whistleblowers

The civil settlement resolves claims brought under the qui tam or whistleblower provisions of the FCA by Jane Rollinson and Daniel Gregorie in the District of Maine.

From 2007 to 2015, Ms. Rollinson worked at Martin’s Point Health Care, one of the health plans participating in the USFHP program, including as its Interim Chief Financial Officer. Mr. Gregorie was a consultant to the CEO and Board of Martin’s Point Health Care and later served on its Board of Trustees.

Under the False Claims Act’s qui tam provisions, a private party can file an action on behalf of the United States and receive a portion of any recovery.  As part of today’s settlement, Rollinson and Gregorie will receive $5.655m.

Many of the cases coming out of the US Department of Justice’s )DOJ’s) Fraud Section are suits filed under the False Claims Act. The DOJ obtained more than $2.9 billion in settlements and judgments from civil cases involving fraud and false claims against the government in the fiscal year ending September 30, 2024.