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Pomona Valley Hospital Medical Center has agreed to pay nearly $2.1 million to resolve allegations that it overbilled Medi-Cal for prescription medication purchased and reimbursed under a federal drug pricing program, the Justice Department announced today.

The settlement agreement finalized on Wednesday is the result of voluntary disclosures Pomona Valley made in 2021 and 2023. After an internal audit,

Pomona Valley determined that it overbilled the United States and California, which jointly fund Medi-Cal, a government-funded program that provides health coverage for low-income individuals in California.

According to the settlement agreement, from December 2016 through September 2021, Pomona Valley improperly charged higher “usual and customary” costs, rather than lower “actual acquisition costs,” as required under the 340B Drug Pricing Program, which requires drug manufacturers to provide outpatient medication to eligible health care organizations at significantly reduced prices.

The overbilling allegedly resulted from Pomona Valley billing for its usual costs following a federal court’s temporary stay of the implementation of the California law requiring 340B providers to bill Medi-Cal at actual acquisition cost rates. But once the court lifted the temporary ban, Pomona Valley failed to implement actual acquisition cost pricing. Pomona Valley ultimately overbilled the United States and California approximately $1.4 million.

Pomona Valley has agreed to pay the United States $873,730 and California $1,225,954 to resolve the allegations, bringing the total settlement amount to nearly $2.1 million.

After making its voluntary disclosure, Pomona Valley cooperated with the investigation by federal and state authorities.

The settlement was negotiated by Assistant United States Attorney Jack D. Ross and auditor Gabriel Lam of the Civil Fraud Section, along with the U.S. Department of Health and Human Service’s Office of Inspector General and the California Department of Justice.

The settled claims are allegations only, and Pomona Valley has not admitted any wrongdoing.