DOJ Joins False Claims Act Suit Involving Medicare Advantage

The United States Department of Justice (DOJ) has intervened in a False Claims Act (FCA) suit against UnitedHealth Group, Inc. (UnitedHealth) filed in a California federal court on May 1, 2017. U.S. ex rel. Swoben v. Secure Horizons, Case No. 09-5013. The DOJ’s intervention marks its first involvement in a whistleblower suit alleging fraud regarding the Medicare Advantage program. DOJ alleges that UnitedHealth, in bad faith, systematically ignored information in failing to investigate unsubstantiated diagnoses of patients to boost its “risk adjustment” payments. DOJ also alleges that UnitedHealth conducted “one-sided” chart reviews that focused only on maximizing government payments, and neglected to correct errors that lead to overpayments.

In Medicare Advantage plans, the government pays health insurers, like UnitedHealth, a per-member, per-month payment for beneficiaries. A higher fee is provided for beneficiaries who have a higher risk score in anticipation of higher health care costs. Program rules require that information must be submitted in support of a patient’s medical record to justify the higher fee. DOJ argues that UnitedHealth knew that a significant portion of the claims reported were invalid because the beneficiaries’ medical records did not support the medical conditions.

It is estimated that billions of dollars in unsupported risk adjustment payments are paid out each year. Earlier this year, DOJ disclosed that it currently has ongoing investigations regarding risk adjustment practices of other carriers, including Aetna and Cigna, suggesting a new trend in FCA litigation. In addition, DOJ indicated that it intends to intervene in another similar case filed by a former UnitedHealth executive alleging that UnitedHealth wrongly received at least $1 billion in risk adjustment payments.