SVCMC Inc. Agrees to Pay $29 Million to Settle FCA Allegations

St. Vincent’s Catholic Medical Centers of New York (known as SVCMC Inc.) settled claims in February 2025 with the Department of Justice for alleged violations of the False Claims Act. The organization was accused of knowingly retaining overpayments from the Department of Defense for healthcare services provided to retired military members and their families.  SVCMC Inc. was accused as early as 2012 of being aware of errors in the calculation of its rates that led to inflated payments for over four years.

Rather than notifying federal agencies of these errors, SVCMC Inc. was accused of actively taking steps to conceal the overpayments to avoid paying back the funds it was not entitled to, which is a classic overpayments Reverse False Claims Act fact pattern. The whistleblowers received over $5 million as a whistleblower reward for filing the qui tam lawsuit with the help of a whistleblower attorney.

The Uniformed Services Family Health Plan

The Uniformed Services Family Health Plan is a health insurance program established by Congress in 1994, funded by the Defense Health Agency. The purpose of the Uniformed Services Family Health Plan is to provide healthcare to military personnel (both active and retired) as well as their families across 17 states. SVCMC Inc. is one of six programs in the Uniformed Services Family Health Plan. As part of participating in the Uniformed Services Family Health Plan, SVCMC Inc. receives “capitated payments,” which are a fixed amount based on each member enrolled in the plan.

When it was brought to light that SVCMC Inc. was being overpaid under this model due to miscalculations, SVCMC Inc. did not report these omissions to federal authorities as it is required to do but rather allegedly did the opposite and concealed the information. They allegedly continued to submit invoices at the inflated rates that the government thought they had for its census and actively conspired to find ways to avoid returning the excess funds.

The “Reverse False Claims” Provision under the False Claims Act

The False Claims Act is known for allowing whistleblowers to work with whistleblower attorneys to report entities actively making false claims to obtain government funding. However, there is also a provision of the False Claims Act, known colloquially is known as the  “reverse false claims,” that requires entities to return money promptly when it owes money to the government. To qualify for a qui tam lawsuit under this provision, the whistleblower must know that a qualified entity received government funds that it was not entitled to without affirmatively billing for them, but upon receipt failed to inform the government and return the funds. Here, this case against SVCMC Inc. qualifies as a reverse false claims matter because it was receiving federal funds administered under the Defense Health Agency, it received overpayments and did not return them.

The Defense Health Agency is part of the Department of Defense. Since the health plan involved fraud with federal dollars, the False Claims Act applies. The alleged actions to both keep the overpayments and actively conceal them is a violation of the False Claims Act. The term reverse false claims is somewhat fanciful, since as a component of participation in funding from government programs the participation must certify that they will comply with the terms of the program which include promptly refunding any overpayments. Thus, there’s an affirmative false claim regarding compliance with the program’s terms.  The reverse concept is that the government itself initiated the payment and the entity didn’t ask for it, but conceptually a reverse false claims act is still just a False Claims Act matter.

Whistleblowers in the SVCMC Inc. Claim

The whistleblowers here were an executive and a board member of SVCMC Inc. Under the False Claims Act, whistleblowers are private citizens who can file lawsuits on behalf of the government when they are privy (typically due to insider knowledge) to an entity committing fraud with federal funds. Whistleblowers are known under the False Claims Act as “relators.” Typically, relators will seek the assistance of a whistleblower law firm that understands the nuances the government is looking for and can assist in presenting substantial and credible evidence to the Department of Justice.

To file a claim, the first step will typically be to file a sealed complaint. This helps preserve the identity of the relator while the government does their initial investigation without tipping off the potential fraudulent entity. After its investigation, which typically takes many years, the government then decides whether to intervene on behalf of the relator. Depending on the government’s decision and the weight of the evidence, a relator may be entitled to between 15-30% of the recovered funds as a whistleblower award. Here, the whistleblowers received $5 million for their part of the overall $29 million settlement, representing a recovery of about 17% as their whistleblower rewards

The False Claims Act in Military Health Programs

A unique aspect of this claim is that it involved a military health program. However, there are many other examples of these claims being brought to light and resolved with the help of whistleblower law firms. For example, the TRICARE program is a sector of healthcare funding that typically services veterans and is commonly seen at the Department of Veterans Affairs hospitals. Throughout the past decade, there have been millions recovered from the abuse of federal funds using the False Claims Act as a conduit to hold the bad actor accountable and along the way receiving an award.

Drugs companies also have been implicated in the over administration of prescription drugs to military veterans under the False Claims Act, especially with the opiate scandals, and issues due to off label usage of drugs or kickbacks. The government relies on whistleblowers to ensure that allocated public funds are being used for the benefit of military patients and their loved ones, which is why it’s critical for well placed individuals who have information to step forward with the use of one the best whistleblower law firms.

The best whistleblower law firms to represent individuals who know about fraud against a military program are typically firms with a prior track record in the defense space like Brown, LLC (see it’s landmark $950 million aggregate defense contractor settlement) and firms also like Brown, LLC that have former Department of Justice workers – since the cases are prosecuted through the DOJ.