California Insurer Kept $320 Million Surplus, DOJ Lawsuit Says

A California public health insurer spent hundreds of millions of surplus dollars in illegal scams to avoid returning the funds to the government, the Justice Department said in a lawsuit filed Wednesday.

Inland Empire Health Plan received $3.5 billion under the Patient Protection and Affordable Care Act to cover California residents to expand the state’s Medicaid program, known as Medi-Cal.

The Justice Department alleges that the insurance company was obligated to return any surplus funds to the federal government. Instead, it found ways to spend its surplus, including giving away “free money” to providers that it later used to bargain ...