A Planned Parenthood affiliate in Texas was reimbursed by Medicaid for $5.7 million in false claims submitted over a two-year period by the affiliate, according to a lawsuit unsealed March 9.

Filed by Abby Johnson, a former Planned Parenthood facility director, who turned against abortion after helping with a sonogram-assisted abortion, the suit alleges that Planned Parenthood Gulf Coast filed approximately 87,000 false Medicaid claims and then covered up the fraudulent billing.

“No matter where a person stands on abortion, everyone should agree that Planned Parenthood has to play by the same rules as everyone else,” said Michael Norton, chief counsel to the Alliance Defense Fund, which filed the suit on behalf of Johnson. “It certainly isn’t entitled to a penny of public funds, especially if it is committing Medicaid fraud.”

The suit was filed in 2010 in U.S. District Court for the Southern District of Texas under a “whistleblowers” statute, which allows people with inside knowledge to expose fraudulent billing by federal contractors.

Such suits are filed under seal and cannot be made public until the federal and state entities have made a decision as to whether or not to join the suit. Federal Judge Kenneth Hoyt unsealed the case March 9.

Though the U.S. Justice Department decided not to join the suit, that decision should not be interpreted as a comment on the allegations. There can be many reasons for a federal or state entity to not join a lawsuit.

A spokesman for the Department of Justice in Washington declined to comment on the case. “The bottom line is that we never comment on suits that are declined,” said DOJ spokesman Charles Miller.

A spokesman for the Texas Attorney General’s Office indicated that no final decision had been made. “Regarding this matter, our office will continue to monitor this case, and we have not waived our ability to intervene,” said spokesman Tom Kelley. He said his office has “no other comment for now.”

Planned Parenthood Gulf Coast failed to return calls.

The state of Texas has a recent law that makes it impossible for Planned Parenthood to obtain additional funds from the state’s Medicaid agency. Texas law now bans Texas’ Medicaid agency from making contracts with “affiliates of entities that perform or promote elective abortions.”

Obliged to Reimburse

When Planned Parenthood Gulf Coast’s alleged billing mistake was first discussed, according to Johnson, who was still working for Planned Parenthood at the time, it was during a regular staff meeting in 2009. The false billing had been going on for two years, according to the suit.

Johnson was present at the meeting, according to the suit. She told the Register that, when asked by an employee during that meeting what the affiliate planned to do about the false claims, one of the leaders said that they were going to hope that they “don’t get caught.”

Norton said that Planned Parenthood Gulf Coast was entitled to Medicaid reimbursement for birth-control-related services but that the abortion provider billed for other services that weren’t supposed to be covered.

Medicaid didn’t notice, according to Norton.

“Medicaid is so big, so complex and so well-funded that it essentially polices itself. There is very little oversight. It is assumed that organizations like Planned Parenthood are billing them correctly,” he said.

It is unclear, according to the suit, whether Planned Parenthood realized immediately that it was submitting false claims. But it does state that, upon discovery of the false billing, the affiliate took no steps to inform Medicaid. The affiliate would have been required by law to reimburse Medicaid for the incorrectly received funds.

“We don’t know for sure that they knew up front that they were doing something wrong,” said Norton, “but what is billable and what is not billable is clearly laid out by Medicaid. If they claim the mistake was unintentional, they still were obligated to reimburse the government for the false claims.”

“Planned Parenthood believes it is above the law, but we are saying with this suit, ‘No, you don’t get a pass,’” said Johnson. 

“I anticipate that Planned Parenthood will vigorously fight this suit, and it will be a war from this point forward,” said Norton.

Eye on Bottom Line

In addition to the allegations of fraud, the document paints a picture of an affiliate that was financially stretched and whose key management team imposed “burdensome and unrealistic expectations” on the staff to help increase funds.

According to the suit, at a 2007 meeting, managers at the affiliate, which had just laid off 13 employees, told the staff, “We must generate multiple visits by each client,” and “We must turn every call or visit into a revenue-generating client.”

The Alliance Defense Fund and the Susan B. Anthony List recently released a compilation of state-level investigations of Planned Parenthood throughout the nation, including investigations of the organization’s billing practices.

The Texas lawsuit becomes public at a time when Rep. Cliff Stearns, R-Fla., chairman of the House Energy and Commerce Subcommittee on Oversight and Investigations, has said that he will hold hearings on Planned Parenthood’s finances.

Register correspondent Charlotte Hays writes from Washington.