On March 22, 2018 Andrew Nguyen filed a civil action in Los Angeles County Superior Court, captioned State of California, ex rel. Andrew Nguyen v. US. Healthworks, Inc., Case No. BC 698811, that alleged that US. Healthworks (USHW), a nationwide chain of occupational and urgent care clinics, failed to comply with its obligations under the Unclaimed Property Law (UPL), by holding unclaimed property USHW was required to report and remit to the State of California, and that USHW’ s failures to do so constitute violations of the California False Claims Act (“CFCA”) and, therefore, USHW is alleged to be liable for treble damages, penalties, expenses, costs and attorneys’ fees.
In March 2022 the California Attorney General filed a Complaint in Intervention in the Andrew Nguyen action. The AG alleged that “USHW accrued tens of millions of dollars in overpayments, millions of dollars’ worth of which USHW let sit on its books for years, sometimes more than a decade, without issuing a refund. Of the overpayments for which USHW did issue a refund check, millions of dollars’ worth of such checks were never successfully cashed and USHW also held those balances on its books indefinitely.”
This month the California Attorney General announced a settlement with U.S. Healthworks. The $7.7 million settlement resolves allegations that USHW knowingly kept millions of dollars from the State of California in unclaimed property, in violation of the Unclaimed Property Law (UPL) and the California False Claims Act (CFCA). The unclaimed property in question included patient balances due to overpayment. As part of the settlement, USHW must hand over unclaimed property totaling $1.5 million to the State Controller’s Office.
In addition USHW agreed to pay the Office of the Attorney General, via wire transfer, the sum of five million two hundred twenty-one thousand thirty-eight dollars and seventy-four cents ($5,221,038.74) pursuant to Government Code section 12652, subdivision (g). It also agreed to pay the sum of one million thirty-one thousand seven hundred two dollars and twenty-seven cents ($1,031,702.27) to Andrew Nguyen, as his qui tam share as the whistleblower in this case.
At times, urgent care centers carry patient balances due to overpayment. This happens when an insurance payment is more than was anticipated after patients pay out-of-pocket costs. While the urgent care should issue a refund in these situations, sometimes refund checks mailed to patients are returned or are never cashed.
Under the UPL, all intangible property that remains unclaimed by the true owner for more than three years after it became payable or distributable must be reported and then remitted to the state. The UPL also mandates 12% interest per year on property that should have been reported or remitted to the state. The CFCA permits the Attorney General to bring a civil law enforcement action to recover treble damages and civil penalties against any person who knowingly makes or uses a false statement or document to either obtain money or property from the State or avoid paying or transmitting money or property to the State.
Even when USHW filed reports with California, the company underreported the unclaimed property it held in 2018, 2019, 2020, and 2021. USHW violated the CFCA when it chose not to report its unclaimed property holdings, thereby knowingly concealing millions of dollars due to the State of California. Although USHW’s unreported property claims were repeatedly brought to management’s attention, management declined to comply and report the property to avoid an audit by state authorities.
The settlement also contains the provision “USHW does not admit to any violations of law and does not admit any wrongdoing that was or could have been alleged by Plaintiff, the Controller or Mr. Nguyen before the date of the Judgment under any law. No part of this Judgment, including its statements and commitments, shall constitute evidence of any liability, fault, or wrongdoing by USHW.