On December 11, 2018, the United States announced that it has elected to intervene in a False Claims Act (FCA) lawsuit filed against Sutter Health and its affiliated entity Palo Alto Medical Foundation (PAMF) alleging that the defendants defrauded the Medicare Advantage program by submitting false patient information to the government. The whistleblower, a former employee of PAMF, alleges that Sutter “has taken and continues to take hundreds of millions of dollars in inflated capitation payments” by submitting “risk adjustment data Sutter knows to be inaccurate, incomplete or false.”

Medicare Advantage Plans

Medicare Advantage, formally known as Medicare Part C, allows private insurance companies, acting as “Medicare Advantage Organizations (MAOs),” to offer insurance plans and administer Medicare benefits. MAOs contract with healthcare providers such as Sutter to provide Medicare services to the plans’ enrollees. Instead of receiving reimbursement on a traditional fee-for-service basis, MAOs provide benefits under a capitated payment system, whereby government reimbursement is based on each individual beneficiary’s risk adjustment data.

Continue Reading DOJ Intervenes in Another Medicare Advantage Risk Adjustment FCA Suit

The Delaware Supreme Court recently affirmed a decision by the Delaware Court of Chancery addressing a plaintiff’s ability to acquire key documents from a defendant company based on allegations against that company in an ancillary False Claims Act (FCA) complaint.  See UnitedHealth Group Incorporated v. Amalgamated Bank as Tr. for Longview Largecap 500 Index Fund, 2018 WL (Del.).

The Underlying FCA Allegations

In two separate federal districts, UnitedHealth Group Incorporated (United) faced unsealed, factually similar FCA complaints brought by two different relators. See United States ex rel. Swoben v. Secure Horizons, No. CV 09-5013 (C.D. Cal.) (Swoben Action); United States ex rel. Poehling v. UnitedHealth Group, Inc., No. CV 16-08697 (W.D.N.Y.) (Poehling Action). (The Swoben and Poehling Actions previously were discussed here, here, here and here.)

 Both relators alleged that United engaged in a scheme whereby it overbilled Medicare through the use of improper diagnostic codes that were not supported by patients’ medical charts and failed to reimburse Medicare once learning of improper diagnostic coding. After its investigation, the government filed complaints in intervention in both the Swoben and Poehling Actions.

Based on the government’s complaints, several shareholders of United brought suit under Delaware law (8 Del. C. § 220) seeking corporate books and records from United relating to the fraud alleged in the government’s complaints. To inspect corporate books and records under Delaware law, a plaintiff must show, among other things, “a proper purpose for conducting the inspection.” One “proper purpose” for an inspection of books and records is “to investigate wrongdoing or mismanagement,” but that purpose must be supported by a “credible basis” to infer possible wrongdoing or mismanagement warranting further investigation.

Continue Reading Adding Insult to Injury: When an FCA Complaint Begets Follow-On Corporate Litigation

The Ninth Circuit recently revived a False Claims Act (FCA) suit against Medicare Advantage Organizations (MAOs) related to risk adjustment payments for Medicare Advantage plans in U.S. ex rel. Silingo v. WellPoint Inc. et al.  As previously discussed in this blog post, MAOs provide Medicare benefits under a capitated payment system, whereby government reimbursement is based on an individual’s risk adjustment data.  The Centers for Medicare and Medicaid Services (CMS) increase monthly payments to MAOs when an individual’s medical diagnoses support a higher level of risk or cost of care.  Recently, both relators and the government in a number of cases have challenged the validity of diagnostic patient information utilized to support risk adjustment data, as discussed here and here.

Continue Reading Ninth Circuit Reaffirms Group Pleading Standard in FCA Cases

Earlier this month, DOJ filed its complaint-in-intervention alleging FCA claims in the long pending Medicare Advantage case U.S. ex rel. Swoben v. Secure Horizons.  The U.S. Court of Appeals for the Ninth Circuit revived this matter last year when it held that the design of a retrospective review to avoid discovery of unsupported diagnoses submitted for risk adjustment can give rise to FCA liability resulting from false certifications.   DOJ intervened in March 2017 only as to the UnitedHealth Group parties in the case.  DOJ had intervened previously as to the SCAN defendants, who settled their portion of the case for $322 million in August 2012.

Continue Reading DOJ Complaint Alleges One-Way Chart Review Renders Medicare Advantage Risk Adjustment Certifications False

Recently, the DOJ intervened in one of several currently pending qui tam cases involving Medicare Advantage (MA) and the Risk Adjustment process used to determine the amount of payments to Medicare Advantage Organizations (MAO).  The government filed its notice of election to intervene in US ex rel. Poehling v. UnitedHealth Group, a case that has been pending in the U.S. District Court for the Central District of California, and which is now unsealed.

Continue Reading DOJ Intervenes in Risk Adjustment FCA Case