Phillips & Cohen and the federal government settled a whistleblower case with two New Mexico health care providers for $12.2 million. The settlement was announced Sept. 1, and alleged that Christus Health and its Santa Fe hospital manipulated federal funding for an indigent care program to boost their revenues.

The alleged scheme involved New Mexico’s Sole Community Provider Fund and Sole Community Provider Supplemental Payments programs and so-called “donations” St. Vincent Regional Medical Center made to Santa Fe County. The “donations” were made to cover the state’s share of funding needed to obtain federal matching funds from 2001 to 2009, according to the whistleblower’s “qui tam” lawsuit.

The Sole Community Provider programs use a combination of state and federal funds to pay hospitals the costs of treating those who cannot afford medical insurance when there is only one hospital in the area or it’s an isolated area. In New Mexico, the state or local government must provide about $1 for every $3 the federal government pays.

Phillips & Cohen filed the whistleblower lawsuit on behalf of Diana Stepan in federal district court in New Mexico in 2011. Stepan, who passed away last year, was the Indigent Health Care Administrator for Los Alamos County from 2002 to 2011. The federal government joined the case after investigating the allegations.

The Phillips & Cohen team included Stephen S. Hasegawa and Peter Chatfield.

“Medicaid regulations prohibit healthcare providers from donating funds for local and state governments to use as their contributions to the Sole Community Provider programs,” said Hasegawa. “The restriction on donations forces those governments to have a stake in the costs of healthcare for indigent patients, so that they keep an eye on expenditures.”

The whistleblower’s complaint is US ex rel. Stepan v. Christus St. Vincent Regional Medical Center Corp. et al., Case No. 11-cv-00572.

Read about Phillips & Cohen’s massive $115 Million whistleblower settlement in June 2017.