The U.S. Court of Appeals for the Ninth Circuit in San Francisco has stopped Planned Parenthood of California’s attempt at silencing a whistleblower who alleges the abortion provider has billed taxpayers $180 million in fraudulent birth-control charges.
Victor Gonzalez, the former chief financial officer of Planned Parenthood’s Los Angeles branch, exposed though a federal lawsuit California clinics purchasing birth-control pills at discount prices, then billing both self-pay clients and federally funded state programs inflated prices.
Through its dozens of affiliated “health centers” over several years, Gonzalez estimates, Planned Parenthood had profited over $180 million from overbilling.
Planned Parenthood, however, had won a dismissal of the fraud case in district court by arguing that a state audit had also found the overbilling, and, therefore, Gonzalez didn’t really qualify as a whistleblower.
And since the state opted not to take punitive action following the revelation of wrongdoing, it may have appeared Planned Parenthood had gotten away with decades of profiting off overbilling taxpayers.
But the unanimous decision by a three-judge panel of the Ninth Circuit’s court of appeals this week has brought the scandal back to light.
“This is a tremendous victory,” said Jay Sekulow, chief counsel of the American Center for Law and Justice, which is representing Gonzalez. “While this case is by no means over, winning this appeal means we have gotten the federal claim over the threshold hurdles and can now get down to the heart of this case: the alleged fraud.”
According to an ACLJ brief filed in the case, “The federal False Claims Act prohibits frauds against the federal government. As a remedial measure, the False Claims Act authorizes certain private individuals – called ‘relators’ – to bring civil suits, in the name of the United States, to enforce the False Claims Act and to recover the fraudulently obtained funds. Such private enforcement actions are known as ‘qui tam’ suits. The relator bringing such a qui tam suit, if successful, receives a portion of the fraud recovery as a bounty – an incentive to bring these suits in the first place.”
In 2002, Gonzalez was hired as the chief financial officer for Planned Parenthood of Los Angeles, where he discovered a long-standing practice of overbilling government programs for reimbursement of birth-control pills and other devices. State officials had even repeatedly told Planned Parenthood to cease the practice in the 1990s, but it continued.
In 2004, Gonzalez communicated with senior officials in Planned Parenthood in an attempt to correct the practice and advised the organization to obtain legal counsel to deal with fallout from illegal billings.
Shortly thereafter, Gonzalez was fired.
Also in 2004, a California Department of Health Services audit of just one of the state’s several clinics confirmed Gonzalez’s allegations, finding the San Diego branch of Planned Parenthood had overbilled the state more than five million dollars over a two-year period.
Rather than initiate prosecution, however, the state passed a new law allowing Planned Parenthood to continue the money-making practice.
As for the uncounted millions that had been overbilled over previous decades, however, a letter from Stan Rosenstein, deputy director of the state’s Department of Human Services Medical Care Services division explained, “It is the decision of DHS that no demand [for recovery of the $5-million-plus in overbilling uncovered in San Diego] will issue pursuant to the audit of Planned Parenthood Associates for the cited period.”
But since the state’s defrauded medical-assistance programs are supported by federal funds, Gonzalez alerted the U.S. attorney general in 2005 and shortly thereafter filed a False Claims suit as a federal whistleblower.
Planned Parenthood’s attorneys argued that since state officials knew of the fraud, Gonzalez doesn’t qualify as a whisteblower, and the case should be allowed to die.
The ACLJ, however, argues that the False Claims Act rules apply to federal whistleblowing, and since the state kept it quiet and did not make the fraud findings public, Gonzalez’s actions still qualify.
“The question on appeal was whether the former [Planned Parenthood] employee is a proper whistleblower under the False Claims Act,” said Sekulow in a statement. “We contended that the answer is ‘yes,’ and now a three-judge panel of the Ninth Circuit has unanimously agreed with us.”
In a ruling yesterday issued with no comment, Circuit Judges Alfred Goodwin (appointed by President Nixon), Mary Schroeder (appointed by President Carter) and Raymond Fischer (appointed by President Clinton) ordered the case reopened.