The State of Virginia has agreed to pay $20.7 million to resolve allegations that a birth injury compensation program improperly instructed program participants to submit Medicaid claims for the lifetime care of severely disabled children.
Virginia’s Birth-Related Neurological Injury Compensation Program paid out the astronomical sum in October to end an investigation led by the U.S. Department of Justice.
Virginia Birth Injury Program Accused Of Wrongdoing
Virginia established a birth injury compensation program over 30 years ago to shield doctors in the State from medical malpractice litigation. Funded primarily by fees paid by doctors and insurance carriers, the birth injury program is designed to pay medical care benefits to families and children affected by severe birth injuries.
But federal attorneys say Virginia’s birth injury compensation program has been doing something else – improperly shifting those expenses onto Medicaid. In court documents, federal authorities claim the Virginia Birth-Related Neurological Injury Compensation Program has been instructing its participants to submit improper Medicaid claims, even though Medicaid, according to federal law, is considered a “payer of last resort.”
Feds Recover Medicaid Disbursements
With a settlement now in the books, the federal government recovers money it spent (through the Medicaid program) on Virginia families enrolled in the birth injury compensation program, including the Arvens, whose son Cody was left severely disabled after suffering oxygen deprivation at birth. Cody’s parents, Ted and Roni Arven, filed a federal lawsuit against the state compensation program in 2015 after years of grueling attempts to secure adequate care for his health needs.
The settlement of $20.7 million reimburses the government for money Medicaid spent on care for the Arven’s child, as well as care purchased for other children in the program. The settlement covers Medicaid claims paid out between January 1, 2006 and December 31, 2016.
A total of $4.1 million of the settlement is being paid to the Arven family, who claimed in court filings that Virginia’s Birth-Related Neurological Injury Compensation Program “required them and other families to apply for Medicaid as a primary source of payment for care,” according to the Richmond Times Dispatch.
Family Fought Nine Years For Birth Injury Funding
“The Arvens are heroes in this,” says Scott Austin, the attorney who represented the family. “They committed nine years of their lives to correcting a wrong being committed by the birth fund.” Austin says the federal lawsuit was filed because Virginia’s birth compensation fund denied benefits to qualifying children, instead attempting to shift these costs to Medicaid.
According to Austin, a change in federal law in 2006 made clear that Medicaid could not be considered the primary source of funding for birth injury medical expenses. Former Governor Terry McAuliffe attempted to make a similar change in 2018, proposing an amendment to the state budget that would make clear that Virginia’s Medicaid program was not the first payer for children enrolled in the birth injury program. The federal investigation began shortly thereafter.
Compensation Program Denies Liability
Despite inking a final settlement, the Virginia Birth-Related Neurological Injury Compensation Program has not admitted to any wrongdoing or liability in the case. In a statement from the program’s board of directors, officials defended their practices, citing a 30-year-old legal opinion authored by then-Attorney General Mary Sue Terry.
In her opinion, Terry argued that Virginia’s birth injury compensation fund, not Medicaid, should be considered the payer of last resort for care expenses paid to children with disabilities due to birth injuries. In its statement, the board of directors said it was “pleased” by the settlement, attributing the lawsuit to “conflicting laws and differing legal interpretations regarding the order of payers for medical services.”
Chairwoman Vanessa Rakestraw reiterated that, “as reflected in the settlement, the program acted in good faith throughout the years in question to meet the medical needs of admitted claimants.”