WASHINGTON – NCH Healthcare System (NCH), which operates two hospitals in Collier County, Florida, has agreed to pay the United States $5.5 million to resolve allegations that it made donations to local units of government to improperly fund the state’s share of Medicaid payments to NCH.
The Florida Medicaid program provides medical assistance to low-income individuals and individuals with disabilities, and is jointly funded by the federal and state governments. 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 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 United States alleged that, between October 2014 and September 2015, NCH made improper, non-bona fide donations by: (1) providing free nursing and athletic training services to the Collier County School Board; and (2) assuming and paying certain of Collier County’s financial obligations. Both types of donations were designed to increase Medicaid payments received by NCH, without any actual expenditure of state or local funds. In particular, NCH’s donations freed up funds for the county and school board to make payments to the State as the state share of Medicaid payments to NCH. This state share was “matched” by the federal government before being returned to NCH as Medicaid payments. The Medicaid payments NCH received were thus funded by the federal government and NCH’s own donations, in violation of the prohibition on non-bona fide donations.
“States and local units of government must use their own money when seeking federal Medicaid matching funds to help ensure that Medicaid payments are determined by beneficiaries’ medical needs rather than donations by hospitals or other health care providers,” said Acting Assistant Attorney General Brian M. Boynton of the Justice Department’s Civil Division. “When private parties violate the rules by making improper donations to fund the state share of Medicaid, they endanger the integrity of the Medicaid program.”
“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. “This settlement underscores our commitment to protecting the integrity of the Medicaid program by ensuring that government funds are legally obtained and used for their intended purposes.”
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 the U.S. Department of Health and Human Services Office of Inspector General.
The matter was handled by Fraud Section Attorneys Alison B. Rousseau and Jonathan T. Thrope and Assistant U.S. Attorney Carolyn B. Tapie.
The claims resolved by the settlement are allegations only and there has been no determination of liability.