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Attorney General Kamala D. Harris Announces Largest Medi-Cal Settlement in California History

Thursday, August 23, 2012
Contact: (415) 703-5837

SACRAMENTO -- Attorney General Kamala D. Harris today announced a $323.67 million settlement with a Los Angeles-based health maintenance organization over excess Medi-Cal and Medicare payments.

The settlement with SCAN Health Plan, Senior Care Action Network, and Scan Group (collectively known as SCAN), which provides health care and support services in Southern California to the elderly and disabled, constitutes the largest Medi-Cal recovery in the state’s history.

“Californians have lost millions of dollars that should have been going toward the health care of our most vulnerable citizens,” said Attorney General Harris. “This settlement will bring a significant amount of those funds back to the state when it is dearly needed, and I commend all of those involved in this action.”

The matter was initially investigated by the State Controller's Office.  The state Attorney General’s Bureau

of Medi-Cal Fraud and Elder Abuse then commenced its own investigation in cooperation with the United

States Attorney’s Office in Los Angeles. The investigation was conducted with the assistance of the California Department of Health Care Services (DHCS), which administers the Medi-Cal program.

A small component of the settlement resolves certain federal Medicare allegations brought by James M. Swoben in a lawsuit filed in July 2009 in federal court in the Central District of California. Mr. Swoben is a former employee of SCAN.  The lawsuit was filed pursuant to the federal and state False Claims Acts, which provide that any person with information about a false claim can file a sealed lawsuit on behalf of the government to recover the government’s losses.

The federal government will be receiving $3.82 million for the Medicare portion of the settlement. For the Medi-Cal portion of the settlement, $319.85 million will be split between the federal government and California, with the federal government receiving $129.38 million and the state $190.47 million. 

The settlement resolves the state’s allegations that SCAN failed to provide contractually required financial information to DHCS, thereby impairing the department from revising capitation rates for SCAN.

“This settlement is a victory for the Medi-Cal beneficiaries we serve,” said DHCS Director Toby Douglas.

“Using the scarce resources available in the most efficient way possible is a top priority for the state. We will continue our ongoing efforts to strengthen programs that protect the integrity of Medi-Cal.”

A copy of the Third Amended Complaint and copies of the settlement agreement; Joint Notice of Election to Intervene in Part; and the Notice of Dismissal and Order Thereon are attached to the online version of this release at www.oag.ca.gov.

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