Oregon Health Authority agrees to pay $22.5M to settle Medicaid contractor dispute
PORTLAND, Ore. (AP) — A long, acrimonious legal battle between state Medicaid contractor FamilyCare Inc. and the Oregon Health Authority has ended with the state agreeing to pay $22.5 million to the company.
FamilyCare has agreed to donate that money to a medical school in Lebanon, Oregon. The Oregonian/OregonLive reported. It was a Pyrrhic victory for FamilyCare’s founder and CEO Jeff Heatherington. The company has shrunk from 370 employees to four.
“Nothing will change the fact that we had the company going and we had 370 of the finest people I have ever worked with,” Heatherington said.
In 1989, the state created the Oregon Health Plan, an ambitious attempt to reform the health care system. The effort called for coordinated care organizations to be formed to administer the Medicaid system at a local level.
FamilyCare was one of two such organizations in the metro area.
The company clashed with the health authority repeatedly over rates, saying the state allowed the other metro-area CCO to charge more than FamilyCare.
The state claimed Health Share deserved to be paid more because its customers tended to be poorer and sicker. FamilyCare sued in 2017.
The Oregon Health Authority admitted no wrongdoing in the settlement.
Oregon Health Authority Director Patrick Allen said, “I am glad we could resolve these proceedings with an agreement that invests in the future of Oregon’s health care workforce and strengthens our health care system.”
News release from the Oregon Health Authority:
State of Oregon and FamilyCare, Inc. announce settlement of federal court suit for $22.5 million
Proceeds of the settlement will be donated to the College of Osteopathic Medicine of the Pacific in Lebanon, OR
(Salem – March 25, 2022) Attorneys representing FamilyCare, Inc., the Oregon Health Authority, and former Oregon Health Authority Director Lynne Saxton announced the settlement of a federal lawsuit that had been scheduled to begin trial next month. Under the terms of the agreement, the parties agreed to release all claims and dismiss the case.
By mutual agreement of the parties, the Oregon Health Authority will pay $22.5 million to FamilyCare over the next 4 years. FamilyCare will donate the proceeds to support the Western University of Health Sciences, College of Osteopathic Medicine of the Pacific - Northwest in Lebanon, Oregon. In addition, the College will separately receive funds from the Heatherington Foundation for Innovation and Education in Health Care, which has provided longstanding support to the school.
FamilyCare CEO Jeff Heatherington said, “We believe that this is a reasonable resolution to a complex dispute and greatly improves Oregonians’ access to health care and helps train future generations of Oregon primary care physicians.”
Oregon Health Authority Director Patrick Allen said, “I am glad we could resolve these proceedings with an agreement that invests in the future of Oregon’s health care work force and strengthens our health care system.”
FamilyCare, Inc., a non-profit formed in 1984, operated a coordinated care organization that served approximately 120,000 Oregon Health Plan members in the Tri-county area and served Oregon’s Medicaid beneficiaries for 33 years. FamilyCare sued the Oregon Health Authority and former Director Saxton in federal court. The case had been proceeding to a trial scheduled to begin April 25, 2022 under Judge Michael Mosman.
No party admits any liability based on the settlement.
