The following comes from a Feb. 4 decision by the U.S. District Court judge Beverly Reid O’Connell.
The Ninth Circuit court of appeals had dismissed the whistleblower suit in 2012, saying that Planned Parenthood did not commit fraud knowingly.
Planned Parenthood filed claims to get over $300,000 in attorneys fees.
Victor Gonzalez (“Plaintiff”) worked as the Vice President of Finance and Administration for Planned Parenthood of Los Angeles from December 2002 to March 2004. Planned Parenthood of Los Angeles is a defendant in this matter, along with nine other regional Planned Parenthood facilities in California, as well as three individuals employed by Planned Parenthood of Los Angeles and Planned Parenthood Affiliates of California, an umbrella organization based in Sacramento.
During his employment with Planned Parenthood of Los Angeles, Plaintiff began to suspect that various Planned Parenthood facilities were engaging in “fraudulent billing practices” with respect to birth control drugs and devices. In essence, Plaintiff believed that Planned Parenthood was defrauding the United States and the State of California by overbilling government reimbursement programs for contraceptives it provided to low-income individuals.
Planned Parenthood participates in the Family Planning, Access, Care and Treatment program (“FPACT”), which operates within California’s Medicaid program, Medi-Cal….
During the relevant time period, the FPACT billing manual generally defined “at cost” as the cost to the provider.
Planned Parenthood purchases contraceptives at a discounted rate. From 1997 to 2004, Planned Parenthood billed FPACT and Medi-Cal at its “usual and customary rate” for contraceptives distributed to low-income individuals….
Beginning on May 5, 1997, the California Department of Healthcare Services (“CDHS”) initiated an exchange of letters with Kathy Kneer, one of the individual defendants in this matter and then-Executive Director of Planned Parenthood Affiliates of California. The letters informed Ms. Kneer that reimbursement claims to FPACT and Medi-Cal should be “at cost.” Ms. Kneer responded that Planned Parenthood’s practice was to bill at its “usual and customary rate” rather than its acquisition cost. CDHS did not reply to Ms. Kneer’s response.
Planned Parenthood continued to bill FPACT and Medi-Cal for contraceptives at its “usual and customary rate” until 2004, when CDHS initiated an audit of Planned Parenthood’s billing practices and concluded that it had not complied with the FPACT billing manual.The audit report estimated that Planned Parenthood’s billing practices had resulted in overcharges of $5,213,645.92 during the audit period beginning on July 1, 2002 and ending on June 30, 2003. Nevertheless, CDHS did not seek reimbursement for these overcharges. In a letter sent to Planned Parenthood on the same day as the audit report’s release, CDHS acknowledged that the FPACT billing manual did not contain a specific definition of “at cost” and stated that, in researching the issue, CDHS had become concerned that “conflicting, unclear, or ambiguous representations have been made to providers.” Based on the lack of clarity regarding the definition of “at cost” and the amount providers were allowed to bill for contraceptives, CDHS concluded that it would be unfair to demand repayment from Planned Parenthood.
Plaintiff participated in the early stage of CDHS’s audit but was terminated in March 2004. On December 19, 2005, over one year after CDHS issued the audit report, Plaintiff filed a qui tam action under the federal False Claims Act,
How Gonzalez blew whistle and became accused of a frivolous suit.
To read the judge’s entire order:
Gonzalez v PPLA Order Denying PP Attorney Fees and Gonzalez Motions for Sanctions 2015