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Whistleblower Cases Show Planned Parenthood Engages in Massive Fraud

by Americans United for Life Legal Team | Washington, DC | LifeNews.com | 10/26/12 6:23 PM

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Planned Parenthood insists it is a necessary and trusted healthcare provider that must be supported by taxpayer dollars. Recently unsealed “whistleblower” lawsuits[i] tell a starkly different story. Former Planned Parenthood employees allege improper and illegal corporate policies were implemented by Planned Parenthood to increase profits, to the detriment of both the taxpayers and the women and families government programs seek to serve.

In the most recently unsealed suit, Thayer v. Planned Parenthood of the Heartland,[ii] Sue Thayer, former manager for Planned Parenthood of the Heartland (PPH), alleges that PPH filed nearly one-half million false claims with Medicaid. According to Ms. Thayer’s complaint, PPH fraudulently received and retained nearly $28 million in taxpayer funding through abusive billing practices.

Ms. Thayer alleges that to enhance revenues, PPH implemented a “C-Mail” program that effectively mailed thousands of unrequested birth control pills to women, and then billed the government for these pills. According to her complaint, PPH also solicited funds from patients for services fully covered by government programs while continuing to bill the government program for full reimbursement.

PPH’s C-Mail program eliminated the standard three month follow-up examination and instead mailed a one-year supply of birth control pills to clients who had only been seen once at a Planned Parenthood clinic.

According to Ms. Thayer, the C-Mail program was particularly designed for Medicaid-eligible patients “due to its revenue potential to Planned Parenthood”[iii] In mid-2006, PPH sought to maximize its profit-enhancing scheme. The affiliate:

[C]onverted the original ‘opt-in’ C-Mail program to a mandatory C-Mail program whereby, usually without the advance knowledge and/or written consent of the patient and/or without informing the patient that the patient could affirmatively decline to participate in Planned Parenthood’s C-Mail program, each patient was, at the time of the initial examination, prescribed [birth control] for one full year or 13 menstrual cycles.[iv]

In some cases, patients had moved so the Postal Service returned the birth control pills to PPH. Instead of crediting the government or making an adjustment to its billing or reimbursements, Ms. Thayer states in her complaint that PPH “instructed its staff” to re-use these pills and send them to future patients, effectively billing government healthcare programs at least twice for the same birth control pills.[v]

Even when patients contacted PPH and requested that they cease sending the birth control pills, Ms. Thayer states that PPH persisted in its fraudulent billing habits.[vi]

This scheme had great financial benefit to PPH. Ms. Thayer states that PPH’s cost for a 28-day supply of birth control pills (one menstrual cycle) was $2.98, yet PPH was reimbursed $26.32 from Medicaid for each one menstrual cycle supply provided to a patient.[vii]

In addition, Ms. Thayer alleges that PPH’s C-Mail program “created a medically unnecessary surplus of at least 120.96 doses (approximately a four-month supply)…for each client each year.”[viii]

Ms. Thayer’s complaint estimates that the program resulted in over $14 million in taxpayer funds that were misappropriated by PPH. [ix]

PPH is not the only Planned Parenthood affiliate facing serious charges of misconduct.

Two additional “whistleblower” lawsuits have been filed against Planned Parenthood Gulf Coast (PPGC), Planned Parenthood’s fourth largest affiliate that operates 10 clinics in Texas and 2 clinics in Louisiana.

Karen Reynolds, a “Health Center Assistant” for nearly 10 years at a Planned Parenthood clinic in Lufkin, Texas, alleges in her complaint that, in several government-funded programs, PPGC employees were trained to and did bill the government for medical services never actually provided, as well as for services that were not medically necessary.[x]

For example, Ms. Reynolds alleges that she and other PPGC employees:

[W]ere instructed, through policies handed down by PPGC corporate officers… and reiterated and enforced by local clinic directors… that if they had a patient using a single method of birth control…they should simply hand her a brown paper bag containing condoms and vaginal film as she walked out the door.[xi]

After handing the patient this bag, PPGC would then charge the government for “counseling” the patient and claim reimbursement for products never requested by the patient.

As Ms. Reynolds describes, “[T]he decision about what services to provide patients was driven by what services the various government programs would pay for, as opposed to the medical necessity of the various procedures and tests.”[xii]

A second “whistleblower” lawsuit against PPGC, Johnson v. Planned Parenthood Gulf Coast, [xiii] corroborates Ms. Reynolds’ claims.

Abby Johnson worked at PPGC’s clinic in Bryan, Texas from September 2001 until she resigned in October 2009. Ms. Johnson alleges that, from the beginning of the Texas WHP program in January 2007, members of Planned Parenthood’s Key Management Team[xiv] instructed the managers of each of PPGC’s 10 Texas clinics to bill for products and services ineligible for reimbursement under the Texas Women’s Health Program.[xv]

According to Ms. Johnson’s allegations, through its billing scheme PPGC improperly received over $5 million in taxpayer funding.

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Earlier this year, the Texas Health and Human Services Commission issued a rule that precludes abortion providers from participation in the Texas Women’s Health Program.[xvi] Planned Parenthood, an abortion provider impacted by the rule, immediately challenged the Texas law,[xvii] exemplifying a brazen attitude pervasive throughout the organization: Planned Parenthood believes that it is entitled to receive taxpayer dollars.

Planned Parenthood’s demand for continued taxpayer largesse in Texas is perhaps ironic considering the “whistleblower” lawsuits it faces. The allegations brought by Ms. Reynolds and Ms. Johnson, if proved true, mean PPGC has been depriving Texan women of millions of dollars in services and care they could have otherwise received.

Importantly, neither lawsuit against PPGC claims that the misconduct was by “rogue” employees or that the alleged instances of improper billing were isolated incidents or the result of mere oversight. In both cases, Ms. Reynolds and Ms. Johnson state that the improper billing practices stemmed from Planned Parenthood’s corporate policies and were part of an affiliate-wide management scheme to raise PPGC’s revenue.

The taxpayers are not the only targets of Planned Parenthood’s profit-enhancing schemes. According to Ms. Thayer’s complaint, PPH’s increased its profits by exploiting the poor women it “served.”

Ms. Thayer states in her complaint that PPH trained its employees to (and did) solicit money from Medicaid clients at the time services were rendered. Employees recommended to patients that they give “50 percent of the amount of the bill” to PPH. [xviii] In soliciting these “suggested donations,” as PPH called them, PPH failed to inform patients that the entire amount of the bill would be reimbursed by the government.[xix]

After receiving “hundreds of thousands of dollars” from these patients, PPH would then bill Medicaid for the same services in full, which violates its legal duty to submit accurate claims to the government for payment.[xx] Ms. Thayer alleges that PPH used the money it collected from the pockets of its Medicaid patients “for purposes unrelated to the provisions of Title XIX-Medicaid services to such patients.”[xxi]

In effect, PPH both falsely billed government programs and took money from low-income women by convincing them to pay for services already covered in full.

The allegations in the Reynolds, Johnson, and Thayer “whistleblower” lawsuits that Planned Parenthood trains its employees to disregard the law and to engage in fraudulent billing practice suggests that Planned Parenthood places its financial bottom line above all else.

These cases buttress the growing body of evidence that Planned Parenthood is a bad investment for the American taxpayer. As Americans United for Life’s 2011 report The Case for Investigating Planned Parenthood documented, state audit reports and admissions by former Planned Parenthood employees detail a pattern of misuse of federal healthcare and family planning funds by some Planned Parenthood affiliates.[xxii] Planned Parenthood affiliates in California, New Jersey, New York, and Washington State, for example, have been exposed for abusing taxpayer dollars.[xxiii]

If the allegations in these “whistleblower” cases prove true in a court of law, the American public should be gravely concerned. Billing government programs for services never provided, that are medically unnecessary, or that patients already pay for in part depletes limited government healthcare dollars and deprives women of funding for actual healthcare services.

LifeNews Note: Americans United for Life (AUL) is a nonprofit, public-interest law and policy organization whose vision is a nation in which everyone is welcomed in life and protected in law.


[i] In a “whistleblower” lawsuit, an individual with knowledge of an organization’s activities provides information about fraud, corruption, or other illegal activity to his or her attorney. “Whistleblowers” are often employees or former employees who have access to company documents and/or internal information, or have been participants in and/or witnesses of illegal behavior. Generally, all communications between these employees and their attorneys will remain sealed for a period of time because, under most “whistleblowers” statutes, such lawsuits are filed under seal and cannot be made public until potential federal and state plaintiffs have determined whether or not to join the suit.

[ii] Second Amended Complaint at 45, United States and Iowa ex rel Thayer v. Planned Parenthood of the Heartland, No. CV00129 (S.D. Iowa July 26, 2012). Ms. Thayer is represented by the Alliance Defending Freedom. This case has been brought under the federal False Claims Act, 31 U.S.C. §3729 et seq., and the Iowa False Claims Act, Iowa Code Ann. § 685 et seq. The lawsuit is pending in the U.S. District Court for the Southern District of Iowa.

[iii] Thayer Complaint at 15.

[iv] Id. at 17-18.

[v] Id. at 20.

[vi] Id. at 20.

[vii] Id. at 17.

[viii] Id. at 22.

[ix] Id. at 25.

[x] Third Amended Complaint, United States and Texas ex rel Reynolds v. Planned Parenthood Gulf Coast, No. 9-09-cv-125 (E.D. Tex. Oct. 28, 2011). For example, according to Ms. Reynolds’ complaint, “the express policy” of PPGC was to bill the government for a predetermined list of services for every eligible patient who visited the clinic. Reynolds Complaint at 12. Ms. Reynolds alleges that “PPGC employees were trained to fill out the patient’s bill before services were rendered,” and that employees were also trained to “bill automatically the pre-determined list of procedures and services based on whether the patient was self-pay, Medicaid, or Title XX” rather than using the patient chart and actual services provided to determine what to bill. Id. at 18-20.

[xi] Id. at 14.

[xii] Id. at 16. Ms. Reynolds states that these wrongful billing practices were part of PPGC’s corporate policy, “issued company-wide to all clinics,” to increase the amount of money it received from government programs. Id. at 9. According to Ms. Reynolds’ complaint, Planned Parenthood required its clinics to post monthly “revenue goals” for each funding source, including individual government healthcare programs (such as the Texas Women’s Health Program (WHP), Medicaid, and Title XX), with the aim of “constantly remind[ing] employees of the need to maximize government billing so the clinic could ‘make its revenue goals.’” Id. at 9.

[xiii]Second Amended Complaint, United States and Texas ex rel Johnson v. Planned Parenthood Gulf Coast, No. CV-H-cv-3496 (S.D. Tex. Dec. 20, 2011). Ms. Johnson is represented by the Alliance Defending Freedom (ADF). This case has been brought under the federal False Claims Act, 31 U.S.C. §§3729 et seq., and the Texas Human Resources Code §§32.039, et seq., and 36.002, et seq. The lawsuit is pending in the U.S. District Court for the Southern District of Texas, Houston Division. Planned Parenthood filed a motion to dismiss Ms. Johnson’s complaint on May 17, 2012. All briefing on the motion has been completed and the court will likely set a hearing date soon.

[xiv] Planned Parenthood’d Key Management Team refers to PPGC’s authorized officers, managers, and agents including Melaney Linton, PPGC’s Chief Operating Officer; Laurie McGill, PPGC’s Vice President; Bonnie Smith, PPGC’s Vice President of Medical Services; Sandra Smolensky, PPGC’s Regional Director of Medical Services; and Dyann Santos, PPGC’s Regional Director of Medical Services.

[xv] Johnson Complaint at 26. According to Ms. Johnson, PPGC authorities not only approved these practices, they instructed their managers “to bill every product and service provided by PPGC to a client to the Texas WHP program …” Id. at 27. Specifically, when Ms. Johnson became Health Center Director for PPGC’s Bryan Clinic in September 2007, she “directly received written and oral instructions, including billing instructions, from members of Planned Parenthood’s Key Management Team…” to this effect. Id. at 25-26.

[xvi] The Texas Women’s Health Program provides low-income women with healthcare, family planning exams, related health screenings, and birth control. See http://www.texaswomenshealth.org/page/about-us (last visited Sept. 17, 2012).

[xvii] Planned Parenthood Ass’n Tex. v. Suehs, 2012 U.S. Dist. LEXIS 62289 (W.D. Tex., Apr. 30, 2012). On April 30, 2012, U.S. District Judge Lee Yeakel granted Planned Parenthood’s request for a preliminary injunction, allowing Planned Parenthood to continue to participate in the Texas WHP Program as the case is litigated. However, the State of Texas appealed Judge Yeakel’s decision to grant a preliminary injunction to the Fifth Circuit. See Planned Parenthood Ass’n of Hidalgo County Tex., Inc. v. Suehs, 2012 U.S. App. LEXIS 9644 (5th Cir. Tex. May 4, 2012). The Fifth Circuit heard the Commission’s appeal on June 7, 2012, and, on August 21, 2012 a unanimous panel (Judges E. Grady Jolly, Har­old DeMoss, and Carl Stewart) lifted Judge Leakel’s temporary injunction and ruled that the State of Texas may cease funding to Planned Parenthood at least until the time of trial on the merits of the case scheduled to begin October 19, 2012.

[xviii] Thayer Complaint at 33.

[xix] Id. at 35.

[xx] Id. at 33. See also 31 U.S.C. § 3729 (a)(1)(A)-(B).

[xxi] Thayer Complaint at 34.

[xxii] See The Case for Investigating Planned Parenthood, Appendix VIII. Failure to Comply With Parental Involvement Laws (Americans United for Life 2011), available at http://www.aul.org/aul-special-report-the-case-for-investigating-planned-parenthood (last visited Jul. 18, 2012).

[xxiii] Id.