Federal court reinstates lawsuit charging Calif. Planned Parenthood with $180 million overbilling

Los Angeles, Calif., Jul 6, 2010 / 04:08 am

A federal appellate court has reinstated a whistleblower’s lawsuit against Planned Parenthood affiliates in California charging that the organizations overbilled the state and federal governments more than $180 million for birth control drugs. Supporters of the suit were “elated” by the unexpected favorable ruling.

Planned Parenthood Affiliates of California, the affiliates’ state political action organization, is also named in the suit.

In its July 1 decision, a three-judge panel of the Ninth U.S. Circuit Court of Appeals unanimously reversed a lower court’s ruling that the whistleblower did not have standing to bring the lawsuit, the California Catholic Daily reports. The court remanded the case for further proceedings.

Previously, U.S. District Court Judge A. Howard Matz ruled that the whistleblower Victor Gonzalez, former vice-president for finance and administration of Planned Parenthood-Los Angeles, did not qualify as a whistleblower under federal law because he was not the “original source” of information exposing the alleged fraud.

Gonzalez worked for Planned Parenthood of Los Angeles from December 2002 until March 2004. He said he was fired for bringing “illegal accounting, billing, and donations practices” to the attention of his superiors.

Jack Schuler, Gonzalez’s attorney in the district court case, explained to California Catholic Daily last year that the complaint documents “evidence of extensive, organized fraud by Planned Parenthood in California.”

He said a “previously buried and ignored” California Department of Health Services 2004 Audit found more than $5 million in “egregious overbilling” in two years by the San Diego/Riverside Planned Parenthood Affiliate.

“Here is 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,” Schuler charged.

The attorney said that Planned Parenthood bought contraceptives and other medicines at deeply discounted rates because of its charitable status, then billed the state Medi-Cal program for 12 or more times the purchase price.

Jay Sekulow, chief counsel for the American Center for Law and Justice (ACLJ), which represented Gonzalez in the appeal, said the decision to continue the case was “a huge victory.”

“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,” Sekulow commented in a statement published on the ACLJ website.

According to Sekulow, the federal False Claims Act forbids government contractors from submitting “false or fraudulent” claims for payment and also authorizes private individuals to bring suit against the alleged offenders to recover the fraudulently obtained funds.

“State audits in both California and Washington State have found (Planned Parenthood) affiliates guilty of overbilling,” he commented.

According to Schuler, both state and federal law explicitly prohibited the kind of overbilling alleged until the California legislature changed state law in 2004 at Planned Parenthood’s request.

One observer close to the case told the California Catholic Daily that supporters of the suit thought there was “no chance” of a win in the Ninth Circuit, believing that Judge Mary M. Schroder would “definitely” rule in Planned Parenthood’s favor.

“At best we thought we might get maybe one vote. We are just elated by this decision.”