Florida hospital settles Medicaid allegations for $4 million

by Ben Vernia | March 6th, 2023

On March 3, the Department of Justice announced that a Lakeland, Florida hospital had agreed to pay $4 million to settle common law allegations that it had improperly donated money to Florida’s Medicaid program. According to DOJ’s press release:

Lakeland Regional Medical Center (LRMC) in Lakeland, Florida, has agreed to pay the United States $4 million to resolve allegations that it made donations to a local unit of government to improperly fund the state’s share of Medicaid payments to LRMC. 

The Florida Medicaid program provides medical assistance to low-income individuals and individuals with disabilities, and is jointly funded by the federal and state governments. Under federal law, Florida’s share of Medicaid payments must consist of state or local government funds, and may not come from “non-bona fide donations” from private health care providers, such as hospitals. A non-bona fide donation is a payment — in cash or in kind — from a private provider to a governmental entity that is then returned to the private provider through a payment by Medicaid. Because Medicaid services are reimbursed jointly by the federal and state governments, a non-bona fide donation causes federal expenditures to increase without any corresponding increase in state expenditures, since the state share of the Medicaid payments to the provider comes from and is returned to the provider. The prohibition of this practice ensures that states are in fact paying a share of Medicaid payments and thus have an incentive to curb Medicaid costs and prevent unnecessary services.  

The United States alleged that, between October 2014 and September 2015, LRMC made improper, non-bona fide donations to Polk County, Florida by assuming and paying certain of Polk County’s financial obligations to other healthcare providers. These donations were designed to increase Medicaid payments received by LRMC, by freeing up funds for the County to make payments to the State as the state share of Medicaid payments to LRMC. This state share was “matched” by the federal government before being returned to LRMC as Medicaid payments. The Medicaid payments LRMC received were thus funded by the federal government and LRMC’s own donations, in violation of the prohibition on non-bona fide donations.

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