A pair of southwest medical institutions have been saddled with a $12.2 million judgment because a Medicaid whistleblower made known illegal donations the hospitals made to local governments for Medicaid.

New Mexico hospital Christus St. Vincent Regional Medical Center and Texas-based Christus Health have both been accused of illegally donating funds to Medicaid and then being reimbursed.

Diana Stephan, a former Indigent Health Care administrator for Los Alamos county in New Mexico, stepped forward to “blow the whistle” on the two health centers and their donation practices. Since that time, this Medicaid whistleblower has passed away. The money she stands to receive as a result of this lawsuit, amounting to $2.25 million, will go to her estate.

The Medicaid whistleblower accused the two health centers of illegally giving money to Medicaid for nearby hospitals under New Mexico’s Sole Community Provider program. This program, discontinued in 2014, helped to pay the medical costs of patients who do not have insurance and provided funds to hospitals in isolated, rural areas.

The federal government had a fund matching agreement with the New Mexico Sole Community Provider program. Local government was supposed to contribute 25% of the funds and the federal government would match it three-fold by contributing 75%. In essence, for every dollar that the local government contributed, the federal government would contribute three dollars.

However, under this program, the local government was not allowed to accept money from private hospitals.

The Assistant Attorney General, Chad A. Readler, stated, “Congress expressly intended that states and counties use their own money when seeking federal matching funds. Using local funds provides an incentive for the counties and states to, among other things, hold down costs rather than rely on non bona-fide donations by private providers.”

The two health centers have been accused of not only donating to local government illegally, but transforming those donations into reimbursable Medicaid payments, the Medicaid whistleblower claims.

According to Law360, the Christus St. Vincent Regional Medical Center and Texas-based Christus Health “donations” have been converted into “discretionary supplemental Medicaid payments that both refund St. Vincent in full for its so-called donations and pay St. Vincent additional amounts of unwarranted federal funding that total approximately three times the amount of the hospital’s investment in such refunded ‘donations.’”

According to the Medicaid whistleblower in this case, the hospitals received three times back their initial donation between 2001 and 2009 and thereby abused the Medicaid system.

Allegedly, the health centers violated Medicaid regulations and statutes and collected increases in discretionary Medicaid payments all the while knowing that they were legally not eligible to receive those payments.

This is where the False Claims Act has been violated, the Medicaid whistleblower alleges. However, both Christus St. Vincent Regional Medical Center and Christus Health maintain that their financial dealings with Medicaid were within the law and that they were transparent and available on public record.

This Medicaid Whistleblower Lawsuit is U.S. ex rel. Stepan v. Christus St. Vincent Regional Medical Center Corp. et al., Case No. 11-cv-00572, in the U.S. District Court for the District of New Mexico.