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Oregon Health Authority reaches $22.5 million settlement with FamilyCare

The legal battle between the state health agency and a former Medicaid provider has been playing out since 2017.
Credit: KGW
(File photo)

SALEM, Ore. — The Oregon Health Authority (OHA) and the nonprofit FamilyCare, Inc. have reached a $22.5 million settlement, ending a years-long legal battle between the state agency and the former Medicaid contractor.

The OHA will pay $22.5 million to FamilyCare over the next four years, and FamilyCare will donate the proceeds to support the Western University of Health Sciences, College of Osteopathic Medicine of the Pacific Northwest in Lebanon, Oregon, according to an OHA news release.

The college will separately receive funds from the Heatherington Foundation for Innovation and Education in Health Care, the OHA said.

FamilyCare once served approximately 120,000 members on the Oregon Health Plan, Oregon's Medicaid program, according to the news release.

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The nonprofit closed its operations in Oregon in early 2018, and CEO Jeff Heatherington said at the time that the state's proposed reimbursement rates for the year were too low to cover the cost of FamilyCare's medical operations.

FamilyCare had already sued the OHA three times at that point, according to the Portland Business Journal, and OHA countersued in 2018, according to The Lund Report.

The newly-announced settlement pertains to a lawsuit brought by FamilyCare against the OHA in federal court, according to the news release. The case was previously scheduled to go to trial on April 25. Under the terms of the settlement, neither party admits liability.

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"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," Heatherington said in a statement.

"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," Oregon Health Authority Director Patrick Allen said in a statement.

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