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The Virginia Birth-Related Neurological Injury Compensation Program Settles for $20.7 Million

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The Virginia Birth-Related Neurological Injury Compensation Program ("The Program") and the Virginia Birth-Related Neurological Injury Compensation Fund ("The Fund") have recently agreed to pay a $20.7 million settlement to resolve FCA allegation brought against them by a whistleblower suit.  Relators allege that the defendants knowingly caused numerous Program participants to submit false claims to Medicaid.  By law, Medicaid is the "payer of last resort" for all healthcare claims for a covered beneficiary, meaning if another insurer or program has the responsibility to pay for medical costs incurred by a Medicaid-eligible individual, that entity is generally required to pay all of or part of the costs of the claim before Medicaid makes any payment.  If a third party is liable to pay for part of a Medicaid participant's care, "Medicaid will only pay that part of the care which is over and above the amount covered by the third party."[1]   The text of Va. Code Ann. §38.2-5009 specifically says that the Program will not cover any items or expenses that would be covered "under the laws of any state or the federal government except to the extent prohibited by federal law."  However, the Program and the Fund made themselves the de facto payers of last resort, improperly shifting payment onto the Medicaid program. 

The Program is an independent entity created in 1987 by the Virginia General Assembly.  The act enabled by the Program (The Virginia Birth-Related Neurological Injury Compensation Act) was set up so that participating physicians, nurses, hospitals, and midwives, etc., make payments to the Fund instead of paying malpractice insurance premiums.  In return, they cannot be sued for medical malpractice arising from injuries sustained by a child during birth.  For example, a child's family can file a claim with the Fund seeking admission, and upon admission to the Program, parents submit claims to the Fund on a regular basis for costs related to the child's care.  So long as the costs are allowed, the Fund makes regular payments for the child's care. 

The Program and the Fund's purpose is to help keep malpractice insurance premiums low for obstetricians and physicians, nurse midwives, hospitals and other participants in the health care industry.  The funding for the Program comes from assessments on physicians, hospitals, and insurance companies in the Commonwealth of Virginia.  Both the Program and the Fund are administered by a Board of Directors, who decide how much each industry pays into the Fund.  However, for the past 28 years, the Board has kept its assessments from these sources as low as possible by illegally making itself the "payer of last resort" and improperly shifting the costs of care onto the Medicaid program.  In other words, the Fund told their patients to first apply to Medicaid to cover the costs of care, and then the Fund refused to pay for any medical treatment or supplies for costs that were covered by Medicaid, making the Fund rather than Medicaid the payer of last resort.   

The Relators were made aware of this wrongdoing through private correspondence and other communications they had with the Program as the parents of a claimant under the Program. 

Relators' child was diagnosed with a "birth-related" disease, and the parents submitted a Virginia Birth-Related Neurological Injury Compensation Act Petition.  The Program decided the child met the requirements for eligibility under the Birth-Related Injury Act.  After being admitted to the Program in 2007, the parents were directed to apply for Medicaid by the Executive Director of the Fund, George Deebo.  At this time, the family was not on Medicaid.  He told them that the Fund and the Program encouraged its families to apply for Medicaid in case they might be eligible for some benefits, and, if possible, receive Medicaid so that the Medicaid program would cover expenses instead of the Fund.  The family was issued a Program Participant card by defendants to use in order to obtain treatment for their child, which stated that the Fund was the "payer of last resort".  The Program guide they were issued when they signed up also stated that "by law, the Birth-Injury Fund is the payer of last resort."[2] 

Therefore, the application for Medicaid that the Relators submitted, on guidance from the Fund and the Program, constituted a false claim.  The family was not qualified for Medicaid and they knew they were not qualified, therefore the application for Medicaid was a false claim.  In 2014, the family did in fact become eligible for Medicaid, and at that time, they were again directed to submit claims related to their child's healthcare to Medicaid instead of the defendants.   The resulting claims were false because they were submitted to Medicaid, which is the payer of last resort, when the law required that they exhaust all benefits from the Fund before submitting claims to Medicaid.

Despite the clear requirements of Va. Code Ann. §38.2-5009, Defendants knowingly caused numerous participants of the birth-injury program to submit false and/or fraudulent claims to the Virginia Medicaid Program.   Relators have specific knowledge that this scheme was widespread and that other Program participants were instructed to do the same by Deebo and the Defendants.  The Program did not admit any wrongdoing or liability in this settlement.

If you are aware of fraud against the government, whether in healthcare or another sector, you may be eligible to blow the whistle in a False Claims Act lawsuit and may be entitled to a portion of the recovery. To find out more, contact Goldberg Kohn for a confidential consultation.

[1]  Ibid.

[2] United States ex rel. Theodore Arven III and Veronia N. Arven v. The Virginia Birth-Related Neurological Injury Compensation Program, Case No. 1:15-CV-870 (E.D. Va.)

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