The Department of Justice (DOJ) has announced a legal action highlighting potential issues within a critical healthcare program for military personnel and their families. A complaint filed by the United States alleges that several health plans participating in the Uniformed Services Family Health Plan (USFHP), a Department of Defense (DOD) health care program for uniformed service members, alongside their trade association, the US Family Health Plan Alliance, violated the False Claims Act. The core of the allegation is that these health plans knowingly kept inflated payments for healthcare services provided to retired military members and their families under the USFHP. Adding to the legal developments, a settlement has been reached with Kennell & Associates Inc., a DOD contractor involved in the program, concerning related conduct.
The USFHP is presented as a vital healthcare option for uniformed service members, retirees, and their families. Six health plans are currently authorized to participate in this program. These six are named as defendants in the government’s complaint: Brighton Marine Health Center, CHRISTUS Health Services, Johns Hopkins Medical Services Corporation, Martin’s Point Health Care, Pacific Medical Center, and St. Vincent’s Catholic Medical Centers of New York.
Under the structure of the USFHP program, the DOD compensates these plans with capitated rates to cover the healthcare services delivered to enrollees. The complaint details that in June 2012, the participating health plans became aware of errors in calculations that had led to inflated rates in previous years. Despite this discovery, the allegations state that the plans actively concealed these overpayments from the government and continued to submit invoices based on the inflated, erroneous payment rates. Further, during discussions regarding future rates, some plans reportedly requested that the government maintain the inflated rates, even with the knowledge of the calculation errors.
“Contractors are obligated to return overpayments, and we are committed to holding accountable those who knowingly and improperly retain such funds,” stated Principal Deputy Assistant Attorney General Brian M. Boynton, leader of the Justice Department’s Civil Division. He emphasized, “Our priority is to ensure that taxpayer funds allocated for healthcare services for military members and their families are used precisely for that purpose, and not for the undue enrichment of those managing the program.”
Echoing this sentiment, Acting Special Agent in Charge Brian J. Solecki of the DCIS Northeast Field Office, the law enforcement arm of the Department of Defense Office of Inspector General, remarked, “Protecting the integrity of the healthcare system for our military community and their families is a paramount concern for the Defense Criminal Investigative Service (DCIS). The DOD expects unwavering adherence to contract requirements, and DCIS, in collaboration with our law enforcement partners and the Justice Department, will relentlessly pursue DOD contractors who engage in fraudulent activities at the expense of the U.S. military.”
The lawsuit was initially triggered by a qui tam action, also known as a whistleblower lawsuit, filed by Jane Rollinson and Daniel Gregorie in the District of Maine. Rollinson’s employment history includes a role as Interim Chief Financial Officer at Martin’s Point Health Care from 2007 to 2015. Gregorie served as a consultant to the CEO and Board of Martin’s Point Health Care and later as a Board of Trustees member. The False Claims Act allows private individuals to initiate lawsuits on behalf of the United States and to receive a portion of any recovered funds. The government retains the option to intervene in such cases, as it has done in this instance. The qui tam case is officially titled United States ex rel. Rollinson v. Martin’s Point Health Care Inc., No. 2:16-cv-00447-NT.
In a related development, the United States has reached a settlement with Kennell and Associates Inc., a consulting firm based in Falls Church, Virginia. This firm provides actuarial consulting services to the Defense Health Agency (DHA) concerning the USFHP program. The settlement addresses allegations that Kennell & Associates failed to inform DHA about errors in the rate-setting methodology. These errors led to inflated USFHP rates and consequently, overstated payments from DHA to the health plans. As part of the settlement, Kennell & Associates has agreed to pay the United States $779,951, plus interest, along with potential future payments contingent on their annual contract revenue and cash reserves through 2025. The settlement amount reflects Kennell and Associates’ financial capacity to pay.
The investigation into this matter was a collaborative effort by the Civil Division’s Commercial Litigation Branch, Fraud Section, and the U.S. Attorney’s Office for the District of Maine, with support from DHA. Attorneys Diana Cieslak, Evan Ballan, and Amy Kossak from the Civil Division’s Fraud Section, and Assistant U.S. Attorneys Andrew Lizotte and Sheila Sawyer from the District of Maine are actively involved in the case.
The government’s intervention in this case underscores its strong focus on combating health care fraud. The False Claims Act is recognized as a powerful tool in these efforts. The Department of Health and Human Services encourages reporting of potential fraud, waste, abuse, and mismanagement through their dedicated hotline: 800-HHS-TIPS (800-447-8477).
It is important to note that the claims outlined in the complaint and settlement agreement are allegations. There has been no formal determination of liability.
