SpectraCare To Pay $1 Million For Allegedly False Medicaid Billings

Allegations of improper financial conduct from healthcare companies aren’t particularly new. Many try to look for ways to improve their bottom line and grow their revenues, and the government’s insurance programs are usually the victims of their crimes.

However, efforts to bring these bad actors to book continue to grow by the day. Last week, the government scored another major win against a fraudulent organization.

Improper Billing Practices for Seven Years

According to a press release from the United States Department of Justice, the government has reached an agreement with SpectraCare Health Systems Inc. - a healthcare service provider based in Dothan, Alabama. SpectraCare Health Systems was accused of violating the False Claims Act by falsifying its filling statements with the state’s Medicaid insurance system.

SpectraCare Health Systems is a 501(c)(3) nonprofit organization that offers integrated healthcare services - such as intermediate care, developmental disability services, behavioral health services, and ailment preventive programs for different types of patients. According to the Department of Justice, the company knowingly submitted false claims for Medicaid for the reimbursement of services that were billed between October 2012 and December 2019.

As expected, many of these claims were fake - some were improperly billed, while others were either over-billed or were duplicate services.

The Department of Justice also alleged that SpectraCare Health Systems either used, made, or caused the use of fake statements and records in its filing system. Lastly, the Alabama company was accused of intentionally or recklessly failing to repay or exercise proper due diligence in determining its possible obligations to repay Medicaid for its claim submissions.

Time to Pay Up

Of course, SpectraCare’s illegal activities didn't go unnoticed. A former employee of the company was able to identify irregularities in its Medicaid filing, and she immediately reported the company under whistleblower protection. The Justice Department failed to share her details in its press release, although it confirmed that she will get a percentage of the penalties that SpectraCare Health Systems will need to pay.

The whistleblower has enjoyed protection under the False Claims Act - the United States’ oldest and strongest whistleblower protection legislation. Signed into law by President Lincoln, the False Claims Act offers an incentive for people to report cases of corporations and organizations engaging in illegal activities that directly affect the federal government financially.

If the information provided by the whistleblower leads to a successful prosecution, the whistleblower becomes eligible for between 15 and 30 percent of the penalties imposed on the organization. In the event that additional penalties are imposed, the whistleblower will get a cut as well.

While the Justice Department failed to offer details on when the case against SpectraCare Health Systems was filed, it did confirm that the United States District Court for the Middle District of Alabama spearheaded it. Other agencies that assisted in the investigation include the Civil Health Care Fraud Investigator of the United States Attorney’s Office, the Office of the General Counsel for the Alabama Medicaid Agency, and the Inspector General for the United States Department of Health and Human Services.

A Slap on the Wrist, but a Penalty Nonetheless

At the end of the day, SpectraCare Health Systems was hit with a penalty of $1 million. Of that money, the United States government will collect $743,193. The Alabama Medicaid Agency will get $256,807 as reimbursements from the company. The remaining funds - totaling about 19 percent of the total penalty - will go to the whistleblower who brought attention to the case in the first place.

It is worth noting that this case has been solved entirely by settlement. SpectraCare Health Systems will not admit to any wrongdoing, and there is a slim chance that any additional discovery will be made to the case. The company will also not have to deal with additional ramifications of the case - including compliance obligations and regulatory oversight.

SpectraCare Health Systems does seem to be getting a great deal out of this all. But, a penalty of $1 million should also do enough to keep the company out of any illegal activities going forward.


Steve Halperin

New York trial attorney Steve T. Halperin is a well-known litigator with extensive knowledge of whistleblower laws and the New York False Claims Act. He has 28 years of experience as one of New York’s top tier attorneys. From the Manhattan offices of HalperinBikel, Steve’s whistleblower cases can run the gamut from lawsuits against healthcare. Whistleblowers: A New Yorker’s Step By Step Guide systems and providers cheating on New York Medicaid to private companies providing worthless services, or false billings by government contractors. With hundreds of winning verdicts and favorable settlements in healthcare and corporate cases, attorney Halperin’s meticulous preparation, courtroom acuity, and client-centered professionalism create remarkable outcomes.

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