The Martin’s Point Health Care center at 331 Veranda St., in Portland. Ben McCanna/Staff Photographer

The U.S. Department of Justice joined a federal lawsuit on Wednesday that accuses Martin’s Point Health Care in Portland and five providers in other states of defrauding the federal government out of more than $300 million.

The defendants are accused of keeping overpayments the government made between 2008-12 to cover health care for military retirees and their families.

The Justice Department and whistleblowers who filed the original lawsuit contend that Martin’s Point and the other defendants knew about the overpayments but did nothing to return the funds.

Public disclosure of the accusations comes about seven months after Martin’s Point and the Justice Department agreed to a $22.5 million settlement for overbilling in Medicare Advantage plans.

The Justice Department filed its new complaint in U.S. District Court in Portland on Wednesday, joining a lawsuit that originally had been filed in 2016 by whistleblowers who used to work for Martin’s Point. It was unclear in Wednesday’s filing how much of the $300 million was specifically tied to Martin’s Point payments, and the 97-page complaint does not break down how much each of the six defendants was allegedly overpaid. Some of the financial information in the complaint was redacted.

Justice Department officials declined to make any further statements or answer questions, including why it took eight years to join the lawsuit. The complaint did say that the federal government was unaware of the alleged overpayments until the whistleblower lawsuit was filed in 2016.


But the complaint did detail the allegations of a complex scheme that grew out of errors in calculating the formulas used to determine how much to pay the defendants for health care services. The complaint said that Martin’s Point and the other defendants, after learning that they were being incorrectly paid by the Defense Department, took “great pains” to avoid informing the federal government of the overpayments.

“Contractors have an obligation to return overpayments, and we will hold accountable contractors that knowingly and improperly retain such funds,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s civil division. “We are committed to ensuring that taxpayer funds for health care services to military members and their families are actually used for that purpose, not to enrich those charged with administering the program.”

Martin’s Point officials denied the accusations in a statement released Wednesday.

Steve Amendo, chief marketing and communications officer for Martin’s Point, said in a prepared statement that the primary care provider is “profoundly disappointed” that the Justice Department joined the case, and that it will “vigorously defend” itself against the accusations.

“This dispute is about contracted rates paid more than 12 years ago,” Amendo said. “The government and Martin’s Point agreed on those rates. Now, the government has alleged that it made forecasting errors when negotiating those rates more than 12 years ago.

“The government paid Martin’s Point exactly the amounts that were negotiated and agreed to, no more,” he said. “Martin’s Point provided the services it agreed to provide in reliance on those agreed-to rates. The government is now demanding a refund of a portion of the rates that it had expressly agreed to pay, arguing more than 12 years after the fact that the plans should repay the government for errors the government itself made in calculating the rates.”



Jeffrey Dickstein, an attorney for the whistleblowers with the Washington-based law firm Phillips and Cohen said, “the defendants were aware of these significant errors but chose not disclose the impact of the errors to the government despite their obligation to do so.”

The whistleblowers who initially filed the lawsuit are Jane Rollinson, former interim chief financial officer at Martin’s Point, and Daniel Gregorie, a former member of the Martin’s Point board of trustees.

As part of the case against Martin’s Point, the complaint quoted an unnamed employee in the finance and accounting department who wrote during an employee survey that “it’s actually a bad thing when the government overpays for a service – even if they overpay us. It was wasteful spending by the (Department of Defense) and now we have an infrastructure that depends on being overpaid.”

The lawsuit was filed under seal in 2016 and was not previously disclosed to the public. The matter became public when the Justice Department joined the case on Wednesday.

In addition to Martin’s Point, defendants include Maryland-based Johns Hopkins Medical Services Corporation; St. Vincent’s Catholic Medical Centers of New York; Massachusetts-based Brighton Marine Health Center; Pacific Medical Center, based in Washington state, and Texas-based CHRISTUS Health Services. The defendants formed an alliance, called the U.S. Family Health Plan Alliance, to collectively negotiate rates with the U.S. Department of Defense, Phillips and Cohen said in a statement.


The accusations involve payments made through the Uniformed Services Family Health Plan, which provides health care to more than 100,000 military retirees and their families.

“(Department of Defense) payments to the health care defendants were pursuant to an agreed-upon formula which was based on many factors, including patients’ previous diagnoses. The ‘qui tam’ (whistleblower) lawsuit alleges that unbeknownst to DOD, from 2008 until 2012, a government contractor made two significant errors in calculating payments under the formula. These errors made patients appear sicker than they really were, causing DOD to pay the healthcare defendants hundreds of millions of dollars more than they were entitled to,” Phillips and Cohen said in the statement.

Amendo, of Martin’s Point, said that the health care provider “is confident that the evidence in this case will show that Martin’s Point met its obligations under the (Uniformed Services Family Health Plan) contract and did not receive an overpayment. The issue had no impact on any benefits or services received by Martin’s Point USFHP members and did not impact the amounts members ultimately paid for those services.”

Amendo noted that the Defense Department twice renewed a 10-year contract with Martin’s Point for the health plan, in 2013 and 2023.

“This lawsuit will not affect Martin’s Point’s ability to continue to provide outstanding care to its patients or members now or in the future,” Amendo said.

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