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Legal & Regulatory Feature


UnitedHealth Beats Feds in Medicare Fraud Case

Walter Eisner • Tue, October 10th, 2017

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A federal judge in California has given UnitedHealth Group Inc. a big victory against the U.S. Department of Justice (DOJ) over allegations that the company cooked the diagnosis books of patients to boost Medicare Advantage (MA) profits.

“Shotgun Pleading”

According to Law360, on October 5, 2017, U.S. District Judge John F. Walter wrote that the government False Claim Act (FCA) suit is too vague, doesn't show intentional wrongdoing, and doesn't show that the government would have withheld payment if it had been aware of the alleged violations.

The judge said the lawsuit was a “classic shotgun pleading that wholly fails to precisely allege how UnitedHealth entities committed wrongdoing.”

DOJ Precedent

This was the first time that the government joined a whistleblower suit filed by James Swoben alleging Medicare Advantage fraud. The issue centered around MA's "risk adjustment" payments, which go up if insurer cover sicker patients.

The government accused the insurer of not properly overseeing shoddy chart reviews by a company called Healthcare Partners LLC, thereby billing the government for unsubstantiated diagnoses.

The government alleged that UnitedHealth had audited a large provider group called HealthCare Partners and found records indicating overlooked diagnoses that would legitimately increase its Medicare Advantage payments, as well as dicey diagnoses that would decrease the payments. According to the DOJ, the company looked into the overlooked diagnoses but not the suspicious ones.

In 2010, DOJ reached a roughly $23 million settlement in an FCA suit alleging Medicare Advantage fraud by Florida-based Medical Resources LLC, but that wasn't a whistleblower case.

Law360 reported that government auditors have estimated that billions of dollars in excess risk adjustment money is being paid out every year.

UnitedHealth is the largest player in the Medicare Advantage market. The alleged misconduct in the Swoben case dated back about 10 years.

When the government joined the whistleblower suit, company officials said they were confident the company complied with Medicare Advantage program rules and were transparent with regulators about how it interpreted the government’s "murky policies."

Looks like the Judge also thought the lawsuit was murky.

More to Come

But this fight is not going away quickly. The government is still after the insurer in a separate suit with similar allegations in a California federal court. UnitedHealth is punching back with a counterattack in a D.C. federal court that accuses the federal government of unfairly holding it to a higher anti-fraud standard than traditional Medicare.

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