Saint Vincent's Catholic Medical Centers of New York has agreed to pay $29 million to settle allegations that it knowingly retained overpayments from the Department of Defense for healthcare services provided to retired military personnel and their families.

The settlement resolves claims that Saint Vincent, which participated in the Uniformed Services Family Health Plan (USFHP), failed to return excess payments it received under the federally funded program. The Defense Health Agency (DHA), which oversees the program, pays health plans' capitated rates to provide services to military members, retirees, and their families.

According to the complaint, Saint Vincent became aware in 2012 that errors in the calculation of capitated rates had resulted in substantial overpayments to it and five other USFHP plans over a four-year period. Instead of reporting or repaying the funds, the complaint alleges that the health plans concealed the overpayments and continued to bill DHA at the inflated rates.
“Those who receive public funds, including participants in government healthcare programs, must return funds to which they are not entitled,” said Acting Assistant Attorney General Brett A. Shumate of the Justice Department’s Civil Division. “Together with our partners across the federal government, we will hold accountable those who knowingly violate this obligation to the American taxpayers.”

The settlement stems from a whistleblower lawsuit filed under the False Claims Act by Jane Rollinson and Daniel Gregorie in the U.S. District Court for the District of Maine. Rollinson, a former interim chief financial officer at Martin’s Point Health Care — one of the participating USFHP plans — and Gregorie, a former consultant and board member at the organization, alleged wrongdoing by multiple health plans. As part of the settlement, the whistleblowers will receive $5.655 million. The U.S. government continues to pursue claims against the remaining USFHP plans.

The case was investigated by the Justice Department’s Civil Division and the U.S. Attorney’s Office for the District of Maine, with assistance from the DHA. The government encouraged individuals with knowledge of fraud, waste, or abuse in healthcare programs to report concerns to the Department of Health and Human Services.

The settlement resolves allegations of misconduct but does not constitute an admission of liability by Saint Vincent.

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