Planned Parenthood whistleblower case alleging they overcharged taxpayers $200 million petitioned to SCOTUS

A national law firm has petitioned the Supreme Court to reinstate a Planned Parenthood whistleblower lawsuit which accused Planned Parenthood affiliates of California of illegally overcharging the taxpayers over $200 million.

On March 5, American Center for Law and Justice (ACLJ) attorneys filed the lawsuit under the federal False Claims Act (FCA), on behalf of whistleblower Victor Gonzalez, the former chief financial officer of the Los Angeles Planned Parenthood.

Gonzalez’s lawsuit alleges that, for years, the Planned Parenthood affiliates massively – and unlawfully – marked up their reimbursement requests for the distribution of birth control drugs and devices to low-income individuals.

The case was initially dismissed by a federal district court in California which claimed Gonzalez did not fit the definition of a whistleblower.

ACLJ argued in their petition for their suit, Gonzalez v. Planned Parenthood of Los Angeles, that the decision of the federal appeals court rejecting the lawsuit dramatically departs from the rulings of other federal appeals courts and creates a substantial obstacle to attempts to pursue those who cheat the government.

According to the ACLJ, the federal False Claims Act (FCA) authorizes both the federal government and private whistleblowers to bring civil suits to recover money obtained by “false claims” against the government.

ACLJ says that federal and state laws and regulations required Planned Parenthood to charge the government no more than “actual acquisition cost” – i.e., what the drugs and devices cost the abortion giant– with no mark-up for profit.

Instead, Gonzalez alleges that Planned Parenthood marked up the charges as much as ten times or more the actual cost.

According to the ACLJ petition:

The Euclid Avenue Center facility obtained birth control pills at a cost of $31,936.95, but added a mark-up of $154,990.05 – about five times the cost – thus receiving a total reimbursement from the state (and through it, the federal government) of $186,927.00. The Mission Valley Center facility obtained Plan B products at a cost of $9,423.90, but added a mark-up of $96,816.09 – more than ten times the cost – thus receiving a total reimbursement from the government of $106,239.99. . . . [T]he Los Angeles affiliate (PPLA) obtained Levlen birth control pills at a cost of $19,154.07, but added a mark-up of $195,657.93 – over ten times cost – thus receiving a total government reimbursement of $214,812.00. PPLA obtained Ortho Novum 777 at a cost of $33,170.96, added a mark-up of $220,365.04 – roughly six or seven times cost – and thus grossed $253,536.00.

ACLJ attorneys represented Gonzalez on appeal, and won reversal and reinstatement of the case in the U.S. Court of Appeals for the Ninth Circuit where the court ruled Gonzalez was an “original source” – a whistleblower – entitled to bring the suit.

When the case went back to the district court, Planned Parenthood moved to dismiss the case on a variety of theories. The district court rejected some of their arguments, but ultimately threw the case out again, this time ruling that the complaint did not allege “falsity” as required by the FCA.

The ACLJ appealed again, pointing out that a request for more money than is allowed is the very essence of a “false claim”. The Ninth Circuit, however, went in a new direction. Instead of reviewing the falsity argument, the appeals court decided on its own that the complaint did not allege that Planned Parenthood “knowingly” violated the law.

ACLJ points out that the court found that state government officials “seemed to tacitly approve” of Planned Parenthood’s overbilling, which they say negated Gonzalez’s claim.

However, documents provided to the court from the ACLJ showed that state officials told Planed Parenthood, in no uncertain terms, that it could not mark up its charges. But the appeals court declined to reconsider the case.

As an example, the ACLC points to correspondence with Kathy Kneer, Executive Director of Planned Parenthood Affiliates of California (PPAC), from May 1997 through January 1998, with the California Department of Health Services (DHS), which shows that they repeatedly and explicitly instructed PPAC that respondents may not seek reimbursement for drugs, specifically oral contraceptives, at mark-ups beyond actual acquisition cost.

As another state official subsequently explained,:

Medi-Cal claims for any drug dispensed by physicians and clinics must be for “cost”, not “usual and customary”.

The Department realizes some providers may have nominal or reduced pricing agreements with drug manufacturers or significantly reduced drug and supply prices . . .

It is the Department’s expectation that these reduced costs be reflected in the Medi-Cal billing for these drugs or supplies.

You have indicated that you were billing oral contraceptives at “usual and customary” based on your understanding of billing procedures for a “service”. The [pertinent] billing code is not descriptive of a service . . . .

According to the lawsuit, on Jan. 26, 2004, the state commenced an audit and caught Planned Parenthood in the illegal overbilling.

A series of e-mails between Planned Parenthood employees, forwarded to Gonzalez, reveals that Kneer reported that “Kim” (Belshe) of DHS “did state that DHS legal office has advised her that the law requires us to bill at acquisition cost.”

“The False Claims Act is the federal government’s “primary civil remedy to redress false claims for government funds,” according to the Department of Justice itself,” writes ACLJ, “In fact, FCA suits have brought in more than $38 billion in recoveries in the last three decades. Even fans of Planned Parenthood should agree that it disserves the nation to hamper the functioning of that important federal statute.”

“We hope the Supreme Court will agree to hear this case and to overturn the Ninth Circuit’s very unfortunate ruling.,” they said.

ACLJ’s petition is available here

UPDATE: In April of 2015, the American Center for Law & Justice (ACLJ) filed a reply brief in support of the ACLJ’s request that the Supreme Court review their False Claims Act (FCA) case against Planned Parenthood. The matter will now be submitted to the Court for action, potentially as early as mid-May.