Prose v. Molina Healthcare of Illinois,, No. 20-2243 (7th Cir. 2021)Annotate this Case
Molina Healthcare contracted with the Illinois Medicaid program to provide multiple tiers of medical-service plans with scaled capitation rates (fixed per-patient fees that cover all services within the plan’s scope). The Nursing Facility plan required Molina to provide Skilled Nursing Facility (SNF) services. Molina subcontracted with GenMed to cover that obligation. Molina received a general capitation payment from the state, out of which it was to pay GenMed for the SNF component. Molina breached its contract with GenMed. GenMed terminated the contract. After GenMed quit, Molina continued to collect money from the state for the SNF services, but it was neither providing those services itself nor making them available through any third party. Molina never revealed this breakdown, nor did it seek a replacement service provider.
Prose, the founder of GenMed, brought this qui tam action under both the state and federal False Claims Acts, 31 U.S.C. 3729, alleging that Molina submitted fraudulent claims for payments from government funds. The district court dismissed the case. The Seventh Circuit reversed. The complaint plausibly alleges that as a sophisticated player in the medical-services industry, Molina was aware that these kinds of nursing facility services play a material role in the delivery of Medicaid benefits.