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March 27, 2023 News

Berger Montague and Kleiman/Rajaram Achieve $28 Million False Claims Act Settlement Against Santa Barbara County and its Behavioral Wellness Agency

The Qui Tam Lawsuit, Which Resulted in One of the Largest Ever False Claims Act Settlements Against a Public Entity, Alleged the County Knowingly Committed Medicaid Fraud Over Many Years

The law firms Berger Montague and Kleiman/Rajaram announce that they have achieved a $28 million settlement in the qui tam litigation brought by whistleblower Judith Zissa, on behalf of the United States, alleging that Santa Barbara County, California and its Behavioral Wellness Agency (formerly known as the Santa Barbara County Alcohol, Drug, and Mental Health Services) (“BWA”) violated the federal False Claims Act by committing Medicaid fraud over the course of many years. This case was filed in 2014 and is captioned United States ex rel. Judith Zissa v. Santa Barbara County Alcohol, Drug, and Mental Health Services, et al., Case No. 14-cv-06891-DMG (C.D. Cal).

Although the federal government declined to intervene, Relator’s counsel, Berger Montague and Kleiman Rajaram, litigated the claims vigorously over the past eight years, defeating the defendants’ motion to dismiss their amended complaint, and reviewing hundreds of thousands of pages of documents to establish their client’s case.

Notably, the federal False Claims Act is one of the most powerful statutory tools for combating healthcare fraud. Under the False Claims Act, a relator not only litigates to recover funds for the government, but the relator is then entitled to a share of the government’s recovery (up to 30%) as an award for blowing the whistle on the fraud and prosecuting a successful recovery. The settlement here, one of the largest ever achieved against any county, required Santa Barbara County and BWA to repay $21.4 million to the federal government, as well as $3 million to Relator Zissa for her retaliation claim and an additional $3.6 million to pay for her attorney’s fees and costs. Of the federal government’s recovery, Relator was awarded 28.5%, just under the maximum allowed.

The suit alleged that Santa Barbara County and BWA knowingly committed Medicaid fraud, where they billed and were paid for claims that either should not have been paid or should have been paid less. Medicaid, known as Medi-Cal in California, is a program that is jointly funded by the federal and state governments but is administered by the states. Santa Barbara County and BWA had a contract with the State of California through the Medi-Cal program to provide services to Medicaid recipients in Santa Barbara County, many of whom are poor or disabled. 

Relator exposed two forms of alleged Medicaid fraud. The first was BWA’s billing for services to patients who either had not received a medical assessment or did not have a valid treatment plan. Under the applicable laws and contract with the State, BWA was required to fully assess all patients and update their treatment plans at least annually to determine what services and treatment they should receive. By assessing and evaluating patients annually, providers like BWA can ensure that their patients are receiving the right kinds of treatment and are not receiving services that are ineffective or unnecessary. Ms. Zissa alleged that BWA knew of the unlawful billing because its own records showed a large percentage of its patients did not have assessments or valid treatment plans and were being provided services without those requisites. She also charged that BWA was able to prevent claims from being submitted to Medi-Cal for patients who lacked the requisite assessments and treatment plans, but chose not to enable a setting in its software that would have flagged unlawful claims, as doing so would have also stopped the flow of the resulting unlawful revenues.

Another form of alleged Medicaid fraud revealed by Relator Zissa arose from BWA improperly billing for “medication support,” which is one of the most expensive of the Medicaid services. Under the applicable regulations, medication support services required that providers had to directly communicate with the patient or their caregiver as to how and when to take medications or advise as to the side effects of a medication. Relator alleged that BWA allowed its staff to bill non-qualifying activities as medication support—including faxing in a patient’s refills and other mundane acts that should have been billed as far less costly services.

“We are extremely proud of this excellent result for our client Judith Zissa and the United States government,” said Sherrie Savett, Chair Emeritus and Executive Shareholder of Berger Montague, who represented Relator Zissa in this case. “This settlement of $28 million is one of the largest settlements ever under the False Claims Act against a public entity. Local governments, such as counties, cities, and their agencies, play an essential role in providing desperately needed services to our fellow citizens. When entities like Santa Barbara County abuse the trust they have been given to bilk the system of money they don’t deserve, everyone, including patients within the system, suffers. We applaud the courage and tenacity of our client—who was illegally fired in retaliation by BWA when she tried to report internally the issues involved in this lawsuit—in bringing this wrongdoing to light.” 

Ms. Savett was joined in the case by Lane Vines, William Ellerbe, and William Fedullo of Berger Montague, as well as Mark Kleiman and Pooja Rajaram of the Kleiman/Rajaram firm based in Los Angeles, California. 

“County governments taking federal and state money have legal and moral obligations to spend taxpayer dollars properly. Public employees like Ms. Zissa have an important role to play in preventing and detecting efforts to defraud these vital programs,” said Mark Kleiman, Managing Partner of Kleiman/Rajaram.

Berger Montague PC is one of the leading plaintiffs’ firms in the country, with deep experience and many successes in whistleblower and qui tam claims brought under the False Claims Act (including Medicare fraud, Medicaid fraud, grant fraud, and customs fraud) and under the IRS and SEC whistleblower programs. Berger Montague is also one of the leading practitioners nationwide in the areas of class actions involving securities fraud, antitrust violations, data breach, and privacy issues, and all varieties of consumer fraud. For more than 50 years, Berger Montague has helped its clients vindicate their rights and seek justice, recovering more than $36 billion in settlements and verdicts. 

Kleiman/Rajaram is a whistleblower law firm based in Los Angeles, California. To date, Kleiman/Rajaram has recovered over $800 million for federal and state taxpayers. 

Media Contacts:

Caroline Cornell

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Melania Stepanenko

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