Two former state officials filed a “whistleblower” lawsuit that alleged several Indiana hospital systems and managed care entities committed “tens, likely hundreds” of millions of dollars of Medicaid fraud.

The former officials filed the lawsuit in early 2021 when they obtained access to analysis from Indiana’s “fraud and abuse detection system” contractor, IBM Watson Health. The case was sealed until earlier this year.

The lawsuit alleges four companies in charge of managing Indiana Medicaid “knowingly and improperly” misused millions in Medicaid funds to pay claims that violate billing requirements. It also said six hospital systems obtained millions in funds by submitting thousands of false claims to Medicaid.

The complaint was filed on behalf of the state and the federal government by John McCullough, the former director of program integrity for Indiana Medicaid; and James Holden, the former chief deputy and general counsel in the Office of the Indiana State Treasurer.

McCullough served in that role from 2014 to 2017 and attended regular meetings with the managed care entity defendants and the hospital defendants. The lawsuit said the Program Integrity team and IBM Watson regularly met with the defendants and reminded them of their obligation to detect, prevent and recoup improper Medicaid payments from false claims. It also said they were advised on how to do so.

The lawsuit focuses on false claims related to three specific areas.

The first area is false claims...

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