Health Law Daily Government intervenes in UnitedHealth fraud suit, alleges $1 billion in damages
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Wednesday, May 17, 2017

Government intervenes in UnitedHealth fraud suit, alleges $1 billion in damages

By Robert Barnett Jr., J.D.

A whistleblower’s suit under the False Claims Act (FCA) (31 U.S.C. §3729 et seq.) against UnitedHealth Group (UnitedHealth), its subsidiaries, and other insurers for their role in allegedly bilking Medicare out of at least one billion dollars was recently unsealed, revealing the massive fraud allegations. The complaint alleges that beginning in 2006, UnitedHealth and its subsidiaries made tens of thousands of false risk adjustment claims through the Medicare Advantage (MA) program to obtain inflated reimbursements. The complaint was unsealed after the Department of Justice (DOJ) decided to intervene in the case against two of the 15 defendants, UnitedHealth Group and WellMed Medical Management, a UnitedHealth subsidiary. On May 16, 2017, the federal government filed its intervenor complaint and the relator filed a second amended complaint.

Allegations. The whistleblower was employed by a UnitedHealth subsidiary from 2004 to 2012. His complaint alleges that UnitedHealth violated the FCA by (1) operating numerous programs to increase its Medicare risk adjustment reimbursement by "over-coding" for various treatments; (2) failing to correct or reimburse false risk adjustment claims despite the existence of an internal auditor; (3) continuing to develop new program to identify opportunities for higher reimbursements; (4) encouraging its provider groups and adjustment vendors to submit false claims; and (5) failing or refusing to fix known errors.

Scheme. The MA program applied the managed care model used by private health insurance companies to Medicare. Rather than use a traditional fee-for-service model, as applied to the typical Medicare provider, MA pays a managed care organization a capitation rate (per-member-per-month), adjusted for each beneficiary by a payment to reflect risk factors such as age, gender, location, and health status. According to the complaint, UnitedHealth Group would "upcode" their risk adjustments by submitting claims for diagnoses that the beneficiary did not have, had in the past but had no more, or was for a more serious condition than the beneficiary actually had. UnitedHealth Group, through its subsidiaries, is the nation’s largest provider of health insurance coverage for Medicare beneficiaries under Medicare Advantage contracts. It covers 2.2 million beneficiaries in all 50 states and the District of Columbia.

The government’s complaint seeks restitution, civil penalties, and treble damages under the FCA.

Companies: UnitedHealth Group; WellMed Medical Management

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