Planned Parenthood accused of overcharging for contraceptives

The L.A. Times reports:

Planned Parenthood affiliates in California may have overcharged the state and federal governments more than $180 million for birth-control pills, despite internal and external warnings that its billing practices were improper, according to a federal lawsuit filed by one of the agency's former finance officials in Los Angeles.

In the lawsuit filed in U.S. District Court, P. Victor Gonzalez claims that he was fired in March 2004 as vice president of finance and administration after raising concerns about the "illegal accounting, billing and donations practices of Planned Parenthood."

The alleged over-billings began in the late 1990s and continued until the state Legislature changed the law in 2004 to allow Planned Parenthood to bill at a higher rate for oral contraceptives, said Gonzalez's lawyer, Jack Schuler.

State health officials have said they do not believe Planned Parenthood acted improperly because the organization was given contradictory guidance on billing from the state.

The lawsuit, originally filed under seal in 2005, seeks damages under the federal False Claims Act. It was made public for the first time this week.

"Contrary to their national reputation as a prominent charity organization and as a health care provider for reproductive services, there is probable cause to believe Planned Parenthood's . . . California affiliates have systematically engaged in fraudulent overbilling against government funded programs," the suit said.

Planned Parenthood Affiliates of California spokeswoman Ana Sandoval declined to comment, saying the organization had not yet seen the lawsuit.

The dispute involves the complicated and arcane reimbursement rules of public health programs run by the federal and state governments.

One federal program, in particular, allows health centers to buy common drugs from manufacturers at a reduced price. In return for the discount, the lawsuit says, such clinics must follow specific rules for seeking reimbursement. The billing manual for California's Family Planning, Access, Care and Treatment program, for example, said that providers had to bill "at cost" for oral contraceptives.

Planned Parenthood, however, billed the government several times more than it paid for the drugs, the lawsuit alleges--seeking what is known as a "usual and customary" fee that takes into account the costs of storing the drugs and dispensing them.

According to documents provided to The Times by Gonzalez's attorney, questions about Planned Parenthood's billing practices were raised as early as 1997 by state Medi-Cal officials. In a series of letters, state officials told the organization's California president Kathy Kneer that the way her affiliates were billing for oral contraceptives was incorrect.

Then in 2004 a state audit of Planned Parenthood of San Diego and Riverside Counties, one of nine affiliate in California, identified more than $5.2 million in over-billings during the 2003 fiscal year.

While that state review was underway, Gonzalez said, he performed his own audit of Planned Parenthood Los Angeles and found similar problems -- $2.1 million in overpayments during a one-year period. He estimated that the agency made a profit of $100 per pill-using patient from the "birth control pill markup alone," documents show.

Planned Parenthood sure likes federal tax dollars.