Feds File False Claims Act Lawsuit Against UnitedHealth Group

Is it the government’s “murky policies,” as suggested by a UnitedHealth spokesman, or was it outright fraud that led to allegations the healthcare insurance giant engaged in fraud? That’s a question that will have to be answered following the U.S. Department of Justice’s recent decision to intervene and file a complaint against UnitedHealth Group (UHG).

In a complaint filed last week in a California federal court, the government alleges that UnitedHealth Group and its subsidiaries obtained inflated risk adjustment payments based on untruthful and inaccurate information about the health status of beneficiaries enrolled in UHG’s largest Medicare Advantage Plan, UHC of California.

More specifically, the lawsuit contends that the insurer funded chart reviews conducted by HealthCare Partners (HCP), one of the largest providers of services to United’s beneficiaries in California, to increase the risk adjustment payments received from the Medicare Program for beneficiaries under HCP’s care. However, UHG allegedly ignored information from these chart reviews about invalid diagnoses and thus avoided repaying Medicare monies received that they weren’t entitled to.

Medicare Advantage organizations receive fixed monthly payments for each enrollee which are based, in part, on patient-risk scores.

The complaint follows the government’s intervention in February in United States ex rel. Poehling v. UnitedHealth Group. Inc., a related lawsuit filed in the Central District of California, that also alleges that UnitedHealth Group defrauded Medicare.

Both cases were filed under the qui tam provisions of the False Claims Act, which allow private parties to sue on behalf of the United States for false claims for government funds, and to receive a share of any recovery. The lawsuit was filed by James Swoben, a former employee of Senior Care Action Network (SCAN) Health Plan and a consultant to the risk adjustment industry. The feds say they will file a complaint in that matter no later than May 16.

Last year, UnitedHealth Group sued CMS alleging unfair regulations governing Medicare Advantage overpayments. The insurer argues that CMS unfairly holds private insurers to more strict audit standards than traditional Medicare. CMS moved to dismiss the suit arguing it should go through administrative channels and not the court. But in late March, a federal judge in Washington, D.C. published a 19-page opinion that basically stated the requirement to inspect individual Medicare patient records to insure accuracy goes further than a long-standing requirement that insurers simply exercise due diligence.

“In essence, the [HHS] secretary would have the court find that the CMS rule’s insistence on ‘proactive compliance activities,’ under pain of a False Claims Act suit provable by negligence alone, is meaningless,” Collyer wrote. “It is not; it imposes (for good reason or not) new obligations.”

Her ruling allows UnitedHealth’s case to move forward and could prove to be a defense for UnitedHealth in the whistleblower cases against it.

UHG is the nation’s largest Medicare Advantage Organization (MAO), with more than 50 Medicare Advantage and Drug Prescription plans providing healthcare services and prescription drug benefits to millions of Medicare beneficiaries throughout the United States.