Nearly eight years ago, Charlottesvillians learned they had the highest health insurance premiums in the country. The Department of Justice filed a notice in December that it was intervening in a longstanding whistleblower case against Sentara Health, which the government alleged had cost taxpayers $665 million.
By June, the DOJ said, never mind.
What happened during those six months to cause the DOJ to withdraw from a case it had been investigating for more than four years?
The DOJ declined to shed light on the decision. “Outside of information on the public docket, we aren’t going to be adding additional comment,” says Brian McGinn, spokesperson for the U.S. Attorney’s Office of the Western District of Virginia.
“Very unusual,” says Tim Heaphy, former U.S. attorney in that same office. “When the department decides to intervene, that means they’ve vetted the information. My sense is this could be the new administration retreating from white collar crime and emphasizing violent crime and immigration.”
Attorney Zach Kitts focuses on whistleblower cases, known as qui tam actions, which means citizens can file claims of fraud on behalf of the government. He says it’s uncommon for the DOJ to intervene and estimates the department does so only in 7 to 8 percent such cases. To move to intervene and then dismiss, “that’s the rarest,” he says.
He doesn’t see a change in administration as a factor in the decision to withdraw from the case. “Health care fraud is a priority with every administration,” and he notes that health care costs drive the federal deficit much more than defense spending.
The U.S. Attorney’s Office of the Western District of Virginia has seen some upheaval the past six months. Its withdrawal from the Sentara complaint was signed June 15 by then acting U.S. attorney Zachary Lee, whose name came up in accounts of the abrupt tenure of former House of Delegates speaker Todd Gilbert. Gilbert was sworn in as U.S. attorney in July and resigned in August after the DOJ ordered him to fire Lee, who was hired under former President Joe Biden, according to the Roanoke Times.
For Sentara, the DOJ bowing out of the case was vindication of what it called a “meritless” suit.
Charlottesville locals Ian Dixon, Karl Quist, and Sara Stovall filed the qui tam suit in 2020. They alleged Sentara’s health insurance arm, then known as Optima Health, jacked its rates 266 percent in 2017 when it was the only area provider. Dixon’s family of four was looking at nearly $3,000 a month in health insurance premiums—with a $14,000 deductible.
By 2021, the DOJ was interested in the case and notified Sentara it would be investigating under the False Claims Act. Two years later, an apparently exasperated DOJ asked a judge to compel Sentara to turn over documents after a meeting in which the company displayed documents in a PowerPoint presentation that it had not turned over to the government.
DOJ filings estimated the government was bilked out of $665 million in Affordable Care Act subsidies.
Sentara has denied allegations that it deliberately defrauded the government and gouged its clients, and maintains it was only trying to help Virginians at a fraught time when Donald Trump, during his first term as president, was calling for the repeal of the Affordable Care Act. Sentara also notes that its rates were approved by Virginia’s Bureau of Insurance and the Centers for Medicaid and Medicare Services.
“At a time when Virginians were at risk of losing access to ACA coverage, Sentara worked with government leaders to meet the needs of Virginians—quickly expanding coverage and supporting the health of our communities,” says Sentara spokesperson Dale Gauding.
“The Department of Justice thoroughly reviewed the case and ultimately declined to intervene, reaffirming what we’ve said from the beginning: The facts and the evidence are on our side,” he says. “It’s unfortunate that the relators in this case have misconstrued the facts in an effort to win financial gains.”
Whistleblower plaintiffs are called relators, and if they prevail, they’re entitled to a portion of the damages the government recovers. When the DOJ reversed its position, Dixon, Quist, and Stovall were back on their own with attorney Martin Bienstock to pursue the case.
And that’s how they ended up with some of the highest-profile qui tam/False Claims Act attorneys in the country.
Dallas firm Reese Marketos is fresh off a $1.64 billion judgment for two whistleblowers in a case that spanned 12 years against Janssen Products, a unit of Johnson & Johnson. A jury found that Janssen made nearly 160,000 false claims related to two of its HIV products. “It is believed to be the largest False Claims Act judgment in history,” says the law firm’s website.
Philadelphia law firm Berger Montague, which specializes in FCA cases, worked with Reese Marketos on the Janssen suit, and the two firms bring eight attorneys to the Sentara case.
They’ll be joining former U.S. attorney Rick Mountcastle, who criminally prosecuted Purdue Pharma for its marketing of OxyContin in 2007. (In the series “Dopesick,” his role was played by Peter Sarsgaard.)
Mountcastle, now with Guttman Buschner, later won a landmark $1.5 billion settlement against Abbott Laboratories for the illegal off-label promotion of Depakote to control agitation in dementia patients in nursing homes, at the time one of the largest single-drug fraud settlements in DOJ history.
“Ian, Karl, and I are absolutely thrilled that our False Claims Act case is in the expert hands of the most successful, reputable law firms in the country,” says Stovall. “They put their full efforts behind us. A mere glance at their track record tells you these firms take on successful cases against powerful corporations.”
She adds, “We are as confident as ever that the facts are on our side, that what we allege is true and that Sentara owes a large amount of money back to taxpayers.”
