Texas Lawsuit Could Bankrupt Planned Parenthood, Make it Pay $1.8 Billion for Medicare Fraud

The state of Texas has asked a federal judge to fine Planned Parenthood more than $1 billion for filing “thousands” of fraudulent Medicaid claims over multiple years — allegations the same Planned Parenthood affiliate has settled in the past. With interest, fines, and penalties, Planned Parenthood has warned the total fine could be a whopping $1.8 billion, inflicting “devastating consequences” for the abortion chain and potentially causing it to close down its operations in the Lone Star State.

Texas began the process of protecting taxpayers from funding Planned Parenthood in 2011, cutting the state’s family planning budget by two-thirds and redirecting state funds away from the nation’s largest abortion business to community health centers. The Obama-Biden administration pulled federal funding from the state program for indigent women, which accounted for 90% of the funding for the state’s Women’s Health Program (WHP), arguing the state could not completely defund Planned Parenthood from Medicaid. Then-Governor Rick Perry rejected federal funding and created the entirely state-funded, pro-life Texas Women’s Health Program (TWHP) on January 1, 2013. (TWHP is now known as Healthy Texas Women.)

Then an undercover video showing Planned Parenthood trafficking in aborted fetal organs came out amidst whistleblowers’ credible allegations of Medicaid fraud.

Texas Defunds after Video Shows Planned Parenthood Trafficking Aborted Babies’ Body Parts

Texas initiated the process to completely defund Planned Parenthood from Medicaid in October 2015 after an undercover video from investigative journalist David Daleiden featured an Austin-area abortionist joking about dismembering babies and discussing Planned Parenthood’s harvesting and sale of aborted babies’ body parts. Daleiden offered the abortionist $60 per harvested organ. At one point, the second-trimester abortionist seemed to indicate that she carried out illegal partial-birth abortions at the buyer’s discretion to preserve more of the fetal organs “intact.” A second secret video captured another employee of Planned Parenthood Gulf Coast (PPGC), director of research Melissa Farrell, saying that it would be “exciting” to learn to dissect unborn babies. “I know it’s sickening on some level, but it’s fun.”

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Texas officials promptly moved to decertify Planned Parenthood as an official Medicaid provider. “The state has determined that you and your Planned Parenthood affiliates are no longer capable of performing medical services in a professionally competent safe, legal and ethical manner,” Stuart Bowen Jr., inspector general of the Texas Health and Human Services Commission, told the Planned Parenthood affiliate. “Earlier this year, you committed and condoned numerous acts of misconduct captured on video that reveal repeated program violations and breach the minimum standards of care required of a Medicaid enrollee.”

By December 2016, the commission notified Planned Parenthood affiliates that they would no longer be eligible to receive state Medicaid payments. The defunding would begin after the mandatory time allotted to appeal the decision, which expired at the end of January 2017.

Instead of filing an administrative appeal, Planned Parenthood sued the state of Texas in court and temporarily prevailed. But the Fifth Circuit Court of Appeals reversed the lower court and ruled in favor of Texas in December 2020. During that time, Planned Parenthood received $10 million in funds for medical claims the state says should never have been filed.

Now, Texas wants that money back — with interest.

Billion-Dollar Ruling Could Bankrupt Planned Parenthood

In addition to restitution, the state has asked for the judge to punish the abortion chain for filing innumerable false claims over more than four years. The state sued Planned Parenthood to pay twice the amount of all improper Medicaid fraud payments received between February 2017 and March 2021, plus interest. It is also asking the judge to impose civil penalties between $5,500 and $11,000 for each fraudulent Medicaid claim Planned Parenthood filed during that period, as well as attorneys’ fees and court costs.

“Plaintiffs seek monetary relief in excess of $1,000,000,” concludes the state’s legal brief. Planned Parenthood has estimated the total bill could come to “more than $1.8 billion.”

“Should Planned Parenthood be forced to pay the over $1 billion sought in penalties, it would have devastating consequences,” said one of the co-defendants, the Planned Parenthood Federation of America, in a press statement.

The abortion chain’s defenders say the $1.8 billion maximum fine would more than bankrupt all three of the Planned Parenthood affiliates operating in the sprawling, pro-life state: Planned Parenthood Gulf Coast (PPGC); Planned Parenthood of Greater Texas, Inc. (PPGT); and Planned Parenthood of South Texas, Inc. (PPST).

The penalty nearly equals the $1.9 billion in total revenue raked in by all Planned Parenthood affiliates nationwide, according to its most recent report for the 2021-2022 fiscal year. Planned Parenthood currently lists a total of $2.3 billion in net assets.

Both sides agree that during this time, Planned Parenthood knew it had lost its status as a qualified Medicaid provider. Planned Parenthood claims it acted in good faith, believing the court decision enabled it to continue billing the state plan. But the same Planned Parenthood affiliate paid millions of dollars to settle allegations of Medicaid fraud during the legal tussle that led to its defunding.

Planned Parenthood Settled Previous Medicaid Fraud Allegations

Planned Parenthood paid $4.3 million to Texas authorities and the Obama administration in July 2013 after a whistleblower produced internal memos instructing abortion facilities to defraud Medicaid by filing phony claims. Karen Reynolds — who worked for 10 years as an employee at Planned Parenthood Gulf Coast in Lufkin, Texas — said local offices bilked Medicaid by “billing for medical services not rendered, billing for unwarranted medical services, billing for services not covered by Medicaid, and creating false information in medical records which was material to billing for medical services.” PPGC would present each office with targets for how much money they should earn, then describe how to give women birth control they did not request or mark post-abortion follow-up visits as though they were actually scheduled to obtain contraception.

Although PPGC settled without admitting guilt, the Obama-Biden administration’s Department of Justice, through U.S. Attorney John M. Bales, said Planned Parenthood’s actions constituted, “in the [g]overnment’s view, an abuse of programs that are extremely important to the well-being of many American women.”

A different whistleblower accused the Planned Parenthood affiliate of committing Medicaid fraud by performing unnecessary medical procedures on incarcerated minority teens for a decade. Patricia Carroll, who worked at PPGC for five years (2007-2012), charged that a juvenile facility that worked with detained teens contacted the local Planned Parenthood with a list of teens eligible for Medicaid coverage (a HIPAA violation). A non-physician Planned Parenthood employee would travel to the facility — Gulf Coast Trade Center in New Waverly, Texas — and subject teens to unneeded procedures, such as second blood tests, needlessly increasing their risk of exposure to hepatitis for profit. Planned Parenthood then falsified Medicaid records between 2002 and 2012 to make it appear that a doctor performed the tests in a clinical setting to obtain maximum billing.

Before Planned Parenthood settled the case with Carroll out of court in 2016 for an undisclosed sum, then-U.S. District Judge Sim Lake ruled that “Carroll has adequately pleaded factual content that allows the court to draw the reasonable inference that Planned Parenthood knowingly filed false claims.”

‘Unthinkable’ Fraud

Texas authorities say the latest case of Planned Parenthood’s Medicaid fraud is open-and-shut. “A provider whose Medicaid credentials are terminated is no longer a ‘qualified’ provider and is no longer eligible to seek or receive reimbursement from Medicaid,” according to the state’s legal filings. Yet from February 1, 2017, through March 21, 2021, Planned Parenthood filed “thousands of claims for payment for Medicaid services, received approximately $10 million dollars in payments from state funds for these claims, and failed to repay the money they received from these claims after they knew or should have known that they were not entitled to keep the money.”

Any organization which “receives reimbursement from Texas Medicaid to which it is not entitled is obligated to remit the payments back to the [s]tate.” Thus, Planned Parenthood should not have kept the proceeds of improper Medicaid payments but “should have identified the overpayment on March 12, 2021,” the date of the final order in the case, and repaid any fraudulent claims within 60 days.

“It is unthinkable that Planned Parenthood would continue to take advantage of funding knowing they were not entitled to keep it,” said Texas Attorney General Ken Paxton (R) when he filed the lawsuit last January. “I will not allow them to benefit from this abhorrent conduct after they were caught violating medical standards and lying to law enforcement.”

Critics have expressed fear that the case has come before U.S. District Judge Matthew Kacsmaryk, the Trump-appointed judge who ruled that the FDA illegally cut corners in its expedited approval of the abortion pill mifepristone in 2000. He also ruled against Title X providers whose federally funded guidelines instruct doctors to talk about sex with minors behind their parents’ backs, writing that “parental rights … do not completely disappear with respect to a minor child’s sexual activity.” Kacsmaryk has not indicated when he will rule in this case, Doe v. Planned Parenthood.

Facing the potential consequences of alleged Medicaid fraud is “just so frustrating,” Dr. Amna Dermish, the chief operating and medical services officer at Planned Parenthood of Greater Texas, told the Texas Tribune.

Dermish was the abortionist whose jokes about dissecting aborted babies triggered Planned Parenthood’s exclusion from Medicaid in 2015.

LifeNews Note: Ben Johnson is senior reporter and editor at The Washington Stand.

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