February 2, 2011; Source: Columbus Dispatch | CareSource, a nonprofit that manages care for Medicaid patients in Ohio, agreed this week to pay $26 million to settle a whistleblower lawsuit that alleged the company was reimbursed for services it didn't provide. Although CareSource claimed it did nothing wrong, Ohio Attorney General Mike DeWine, whose office helped with the case, said otherwise.

"The defendants in this case defrauded the state's Medicaid program by failing to provide critical health-care services, which is both unconscionable and unacceptable," he said. The suit, which was filed under the federal False Claims Act, was brought by Robin Herzong and Laura Rupert, two former employees who claimed that the Dayton-based company received Medicaid payments for assessments and care coordination it didn't really provide to poor children and adults, many of them disabled.

While making claims and not delivering services is bad enough, the more egregious nature of the case is that children could have been harmed because of the company's alleged fraud. "These are kids with serious illnesses – it's not like allergies – and could have really benefited from care management," Herzog said. The suit claimed that CareSource only assessed about 10 percent of children who should have been screened.

The two single mothers will receive $3.1 of the settlement, with $10 million going to Ohio and the rest to the federal government. While a hefty fine, the company shouldn't feel too much pain. Last year the state paid it $2.6 billion. One, though, is left puzzling how after being accused of faking claims, then settling – admittedly without saying it was at fault – CareSource is allowed to continue to do business with the state.

Little comfort comes from Benjamin Johnson, a spokesperson for the Ohio Department of Job and Family Services, which oversees Medicaid. He said: "The allegations are a cause for concern, but we are comfortable with the relationship and the terms of the settlement."—Bruce Trachtenberg