Suit: Centene illegally took millions from poor, disabled
AG wants 3 companies barred from Medicaid
A newly unsealed lawsuit shows that Attorney General Dave Yost accuses health-care giant Centene and two subsidiaries of taking part “in a conspiracy to wrongfully and unlawfully obtain ... tens of millions of dollars” in Medicaid payments meant to help the most vulnerable Ohioans.
Aside from seeking damages triple what Yost said was improperly taken, Yost proposes a potentially bigger blow: barring the three companies from participating in Ohio’s federal-state Medicaid program, which could cost them hundreds of millions of dollars.
It’s the most serious accusation yet in Ohio’s drive to go after pharmacy benefit managers and related entities that have caused financial and legal headaches in Ohio for years – especially related to the $3.9 billion allocated for prescription drugs under Medicaid,
which provides health-care coverage for the poor and disabled.
The 22-page lawsuit – plus 259 pages of exhibits – originally was filed under seal March 11 in Franklin County Common Pleas Court because of a non-disclosure agreement with Centene. However, lawyers for Centene took the dispute to federal court and urged the judge to unseal it, which he did.
The defendants are Centene and two wholly owned subsidiaries: Envolve Pharmacy Solutions and Buckeye Community Health Plan, which has provided managed-care services since 2004 for Ohio’s Medicaid program. Also involved is another offshoot of Centene: Health Net Pharmacy Solutions.
Suit: Improperly obtained Medicaid money went to Centene’s bank account
“The conspirators’ actions were undertaken with the specific intent and purpose to
wrongfully increase the profits of the conspirators, which all flowed to a common destination – Centene’s bank account,” the lawsuit says.
Prepared with the help of lawyers in Mississippi and Akron, the litigation outlines “an opaque and multi-layered billing process” set up to hide the alleged profiteering from Ohio Medicaid officials.
“Buckeye furthered the conspiracy by knowingly permitting itself to be overbilled for pharmacy services by its co-conspirators and by misrepresenting to ODM the costs it actually incurred in providing pharmacy benefits to its members. Buckeye’s subcontract
with Envolve became, in essence, a conduit through which the Conspirators could secretly siphon funds from the Ohio Medicaid program, characterize them as costs rather than profits, and funnel them to Centene,” the lawsuit said.
In a procedural quirk, since the complaint was filed under seal, the response from Centene, based in St. Louis, and its subsidiaries in federal court actually became public first.
It said Yost’s “outside counsel failed to recognize the regulatory history and precedents of Ohio’s Medicaid system and violated the state’s contractual requirements to first provide ‘timely written notification’ of any alleged violation and ‘to make every reasonable effort to resolve the dispute.’”
The state’s legal claims are “easily explained away once the facts about Buckeye’s reporting and billings to the Ohio Department of Medicaid are understood,” the Centene filing says.
While acknowledging such state’s allegations that it added a surcharge to a drug-dispensing fee, the corporation cited emails from as far back as 2016 in which the setup was openly described to Medicaid officials.
With annual revenue of more than $100 billion, Centene is ranked by Forbes as the 42nd-largest company in the U.S.
Yost: Efforts to ‘pad profits’ began in 2016 under CVS contract
The state lawsuit says the problems began when Centene acquired HNPS in March 2016. That purchase also brought Centene the rights to a HNPS deal with the country’s largest pharmacy benefit manager, CVS Caremark.
“Centene and Envolve quickly realized that they could shift the work of processing
Buckeye’s pharmacy claims to Caremark, pay lower prices, obtain perclaim discounts, and keep the resulting savings as profits by concealing them” from Ohio Medicaid, the lawsuit says.
“Centene, Buckeye and Envolve secretly retained these monies for themselves to pad Centene’s profits at the expense of the taxpayers of the state of Ohio.”
The amount retained was huge; the lawsuit cites one example from September 2018 that totaled about $400,000 for a single week.
Yost is seeking;
• Charges for interest on amounts wrongfully obtained;
• Treble damages;
• Penalties not less than $5,000 and not more than $10,000 for each deceptive claim or falsification; • Liability for costs incurred by the State in enforcing the provisions of Ohio law;
• Termination of the violating party’s provider agreement; and
• Withholding all payments to the provider. drowland@dispatch.com @darreldrowland