Planned Parenthood affiliates defraud taxpayers of millions, fired exec alleges

Los Angeles, Calif., Mar 11, 2008 / 03:30 am

A federal whistleblower lawsuit filed by a former Planned Parenthood executive alleges that nine affiliates in California knowingly engaged in a criminal plot to defraud millions of dollars from state and federal taxpayers over a period of at least six years, the California Catholic Daily reports.

According to one of the allegations, Planned Parenthood used its charitable statues to purchase contraceptives and other medicine at a discount rate.  It then billed the state health program for twelve or more times the purchase price.  The alleged malfeasance cost taxpayers perhaps more than $10 million per year.

Victor Gonzalez, former vice-president for finance and administration of Planned Parenthood-Los Angeles secretly filed the suit in 2005 in a U.S. District Court in Los Angeles under the federal False Claims Act.  The suit was unsealed earlier this week following a review by the U.S. attorney’s office.

Gonzalez, who worked for Planned Parenthood from December of 2002 until March of 2004, alleges he was fired for bringing "illegal accounting, billing and donations practices” to the attention of his superiors.  The lawsuit alleges that Planned Parenthood’s irregular billing practices began in the late 1990s and continued until 2004, when the organization persuaded the state legislature to change the law, allowing it to bill the higher rates.

“The complaint documents what we believe is evidence of extensive, organized fraud by Planned Parenthood in California,” Jack Schuler, Gonzalez’s attorney, told the California Catholic Daily.

Schuler elaborated saying that “A previously buried and ignored California Department of Health Services 2004 Audit, which found more than $5 million in egregious over-billing in two years by the San Diego/Riverside Planned Parenthood affiliate, is an extraordinary indictment against Planned Parenthood." He characterized the case as "the ultimate Hollywood movie set façade of a corporation that poses as charitable while grossly over-billing government programs funded to service the needy, not the greedy." "I would not be shocked that criminal prosecutions might follow,” he added.

Schuler also claimed that Planned Parenthood brought contraceptives at a deep discount rate, “then billed the state Medi-Cal program for 12 or more times their purchase price.”  He said this practice was against both federal and state law.

In a separate wrongful termination lawsuit in the Los Angeles Superior Court, Gonzalez makes similar charges specifically involving the purchase of the contraceptive device NuvaRing at government-subsidized discounts and its sale at a massive markup.

“The effect of this at [Planned Parenthood-Los Angeles] is overcharging the State of California and self-pay patients approximately $2,000,000 per year,” the lawsuit alleges. “This has been going on for a number of years, and is prevalent with all the other California [Planned Parenthood] affiliates. As a result, the overcharging exceeds $10,000,000 per year.”

Gonzalez said he brought his concerns about the overcharging practices before other Planned Parenthood executives.  He claimed that both Planned Parenthood-Los Angeles and the Sacramento-based Planned Parenthood Affiliates of California were “attempting to stopgap this violation.”

Gonzalez has also alleged that Planned Parenthood-Los Angeles advanced about $12,000 to Planned Parenthood Affiliates California “to cover expenses for lobbying and advocacy.”  He alleged the loans are “simply a subterfuge to support a whole team of people who advocate for specific issues and specific candidates in contravention of IRS guidelines” for non-profits.

He has said that Planned Parenthood-Los Angeles often misused grants and donations from private, corporate, and charitable sources.  Employees of the organization, he claims, also misused corporate credit cards.

Gonzalez further claims that Planned Parenthood-Los Angeles provided “doctored and rosy financial projections” to obtain a $400,000 state-financed loan for a South Los Angeles Clinic.

“We believe the evidence is overwhelming that Planned Parenthood clearly knew the law and then willfully and repeatedly violated it,” said Schuler.