Fraud Suit Against AIDS Healthcare Foundation Nixed

CA Court Dismisses Case on Punitive L.A. County Audits; County Admits AHF Did Not Overbill for Patient Services

In News by AHF

Los Angeles County admitted its two audits did not reflect AHF’s significant out-of-pocket costs to serve eligible patients.

 County was seeking to recover over $5.2 million from AHF, but admitted to federal officials that,

“A review of AHF’s general ledger for the audited time periods revealed over 6 million dollars in unreimbursed, appropriate and allowable costs under the [Ryan White] CARE Act incurred by AHF.”

Separately, a federal court in Florida dismissed an unfounded whistleblower lawsuit earlier this week by three former AHF employees over the legality of AHF’s model of finding and linking HIV-positive individuals into care.

LOS ANGELES (June 22, 2017) In a second and equally important recent legal victory for AIDS Healthcare Foundation (AHF), the Superior Court of California, County of Los Angeles has dismissed a lawsuit and related cross action involving charges of overbilling for the delivery of patient care and services by AHF as well as punitive and retaliatory action by Los Angeles County against AHF over the County’s AIDS response.

 The case regarding County audits of AHF [Case # BC517979], which was first filed on August 12, 2013, was dismissed by the Court on May 22, 2017.

“The dismissal of this L.A. County billing case is another huge victory for AHF, a vindication of our business model and practices and a validation of what we try to do best: provide competent, cutting-edge and compassionate HIV/AIDS prevention and care services to those most in need, regardless of their ability to pay,” said Michael Weinstein, AIDS Healthcare Foundation President. “Coupled with the dismissal earlier this week of a completely unfounded federal whistleblower lawsuit filed by three former AHF employees in Florida challenging the legality of our HIV testing and linkage programs, it makes for a very good week for AHF, for our future, and for the patients and public we continue to serve and care for.”

In 2012 and 2014, L.A. County conducted two flawed audits of AHF [1] and erroneously determined or somehow decided that AHF had overbilled it for services provided to L.A. County patients that were not covered under the federally funded, locally administered Ryan White Program, a principal source of funding for the majority of care and services provided for HIV/AIDS patients nationwide. According to an Appeal Brief later filed by the County with the Department of Health and Human Services:

“The County sought reimbursement of the $5,270,383, which represented the audit exceptions found in the two fiscal reviews, from AHF. AHF disagreed with each audit finding. AHF sued the County to invalidate the audit findings and the County counter-sued AHF for breach of Contract.”

Because County officials had alerted the Health and Resources Service Administration (HRSA), which oversees the Ryan White Program, about the alleged AHF overbilling, HRSA was seeking reimbursement from L.A. County for the $5.2 million in federal funding in question that passed through the County. However, in the same Appeal Brief, Los Angeles County Counsel Mary C. Wickham and Assistant County Counsel Sharon A. Reichman wrote:

“A review of AHF’s general ledger for the audited time periods revealed over 6 million dollars in unreimbursed, appropriate and allowable costs under the CARE Act incurred by AHF to the benefit of the Contract, which includes the $3,514,966 discussed above. As such, it is requested that HRSA withdraw its request for repayment and permit the County to exercise its discretion to waive certain requirements of the Contract and to resolve the audit findings with AHF.”

Separate Federal Whistleblower Case Against AHF in Florida Dismissed

Separately, in a ruling dated June 9, 2017 and formally unsealed June 20, 2017, the Honorable Kathleen M. Williams, United States District Judge for the United States District Court, Southern District of Florida, dismissed unfounded whistleblower claims [Case 0:14-cv-61301-KMW] about the legality of AHF’s business model of HIV testing and linkage-to-care brought by three former AHF employees. The Court, the Department of Justice and three U.S. Attorneys in South Florida also suggested in its ruling and pleadings that AHF’s model of HIV testing and linkage is even a preferred model, or one encouraged under the Ryan White Program.

 Despite the fact that neither the United States Government nor the State of Florida chose to intervene in the former employees’ case (declining to intervene in the case in February 2015)—an action that is often a telling indicator of the potential insufficiency of claims in a case—the three ex-employees nevertheless pursued the case with private attorneys.

 On May 30, 2017, the United States Federal Government filed a formal brief in the case (a Statement of Interest) in which they wrote that the former AHF employees were “incorrect” in their unfounded assertions about AHF’s business model of testing and linkage.

 In the Statement of Interest, three Department of Justice lawyers in Washington and one Acting Attorney General as well as two U.S. Attorneys all assigned to the U.S. District Court for the Southern District of Florida wrote that performance-based commissions (i.e. bonuses) paid to employees are legal and proper “… within the confines of the Ryan White Program” as long as long as they are made to “…bona fide [AHF] employees.”  In fact, the government argued “That Congress embraced the notion of ‘one stop shopping’ for patients with HIV/AIDS.”

[1] The first L.A. County audit, completed on August 16, 2012, covered a one-year Contract between AHF and the County (March 1, 2008 – February 28, 2009). The second audit was completed on July 20, 2014, and covered the Contract time period from March 11, 2011 – December 31, 2012.


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