Lompoc Valley Medical Center

Lompoc, CA 2014--2016 FQHCs / Community Health Centers

DOJ California Department of Justice California DHCS Medicare Medicaid Fraud False Claims Act Improper Billing

Penalty

$5 million

Outcome

Lompoc Valley Medical Center, a California Health Care District operating hospital and community clinics, paid $5 million to resolve False Claims Act and California False Claims Act allegations that it submitted false claims to Medi-Cal for Enhanced Services under the ACA Adult Expansion program that were not allowable medical expenses, were not priced at fair market value, and were duplicative of services already contractually required.

Details

Lompoc Valley Medical Center — Medi-Cal Enhanced Services False Claims (2023)

Outcome: Lompoc Valley Medical Center (LVMC), a California Health Care District operating a hospital and several community clinics in Lompoc, California, paid $5 million to resolve federal and state False Claims Act allegations that it submitted false claims to California Medicaid (Medi-Cal) for Enhanced Services provided to Adult Expansion Medi-Cal members under the Affordable Care Act.

Lompoc Valley Medical Center is a public health care district serving Santa Barbara County, operating Lompoc Valley Medical Center hospital and multiple outpatient clinic locations. As a health care district, LVMC is a unit of local government established under California law. The clinics within the LVMC system serve Medi-Cal-enrolled patients and operate in the service area of CenCal Health, the county-organized Medi-Cal managed care plan for Santa Barbara and San Luis Obispo Counties.

The settlement, announced in August 2023, resolved allegations that LVMC knowingly caused the submission of false claims to Medi-Cal pursuant to Enhanced Services agreements with CenCal Health covering the period January 1, 2014 through June 30, 2016. The United States and the State of California alleged that the Enhanced Services payments received by LVMC were not "allowed medical expenses" under the DHCS-CenCal contract; were predetermined amounts that did not reflect the fair market value of services rendered; and in some cases were duplicative of services LVMC was already required to provide under its existing contract with CenCal.

The case arose from a qui tam lawsuit by Dr. Julio Bordas, CenCal's former medical director, who identified the problematic Enhanced Services payment arrangements during his tenure. Dr. Bordas received approximately $950,000 as his relator share of the federal recovery. The LVMC settlement was part of the same overarching investigation that produced a $68 million multi-entity settlement covering CenCal Health, Community Health Centers of the Central Coast, Cottage Health System, and Sansum Clinic. With the LVMC settlement, total United States recovery across the entire investigation reached approximately $95.5 million.

Primary Source: Health Care Provider Agrees to Pay $5 Million for Alleged False Claims to California's Medicaid Program — DOJ Office of Public Affairs

How Crucible Prevents This

Crucible contract compliance controls would require Enhanced Services agreements to be reviewed against DHCS-approved allowable medical expense definitions before execution. A pre-claims submission attestation gate would require billing staff to confirm that claimed Enhanced Services were not duplicative of base-contract obligations and were priced based on documented fair market value analysis. Ongoing contract monitoring for ACA Medicaid Expansion programs would flag deviations between contracted add-on payment terms and DHCS regulatory requirements.

Source: Health Care Provider Agrees to Pay $5 Million for Alleged False Claims to California's Medicaid Program — DOJ Office of Public Affairs

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