Complaint alleges fraud of hundreds of millions—possibly billions—of dollars
Last week the federal government intervened in, and the District Court for the Central District of California unsealed, a whistleblower’s False Claims Act (FCA) suit against UnitedHealth Group (UnitedHealth) and WellMed Medical Management Inc. (a company acquired by UnitedHealth in 2011).
The whistleblower in the case, Benjamin Poehling, the director of finance for a UnitedHealth subsidiary, alleges that the insurer and 12 other health plans[i], including Aetna, Inc. and Humana, Inc., defrauded Medicare by engaging in a scheme that submitted false risk adjustment information to the Centers for Medicare and Medicaid Services (CMS) over a period of 10 years. The suit alleges that the practice of “upcoding” risk adjustment claims may have enriched UnitedHealth and the other defendants by “hundreds of millions—and likely billions—of dollars for over a decade.”
Some Medicare recipients participate in managed health plans operated by private insurers like UnitedHealth (“Medicare Advantage” plans). Under the plans, insurers are paid a set per-member, per-month rate that is meant to cover the recipient’s health care costs plus the insurer’s overhead. Insurers can, however, be paid more by the government when they submit “risk adjustments” to compensate them for patients with more complex and expensive health problems. It is these risk adjustments that are at the heart of the UnitedHealth case.
The whistleblower alleges that UnitedHealth and the other defendants boosted their risk adjustment payments by submitting claims for diagnoses that plan members didn’t have or for which they were not treated at all—a process known as “upcoding.” The upcoding procedure involved chart reviews undertaken by UnitedHealth and others that looked for ways to assign more serious diagnoses to patient charts, thus increasing the risk adjustment paid to the insurer. Employees, including the whistleblower, were evaluated based on their ability to maximize revenue through risk adjustment, goals that were achieved not only through upcoding on the back end of the process, but by paying bonuses to physicians to find evidence of diseases or conditions that justified higher risk adjustment scores. The case also cited emails from and between UnitedHealth officials that utilized “code names” for initiatives designed to increase risk adjustment payments.
Aside from the sheer scope of the alleged fraud, the UnitedHealth case is significant for two additional reasons. First, UnitedHealth represents the largest managed care/Medicare Advantage plan in which the government has intervened based on irregularities in risk adjustment submissions (interventions being much more common with hospital chains engaged in similar behaviors). Second, UnitedHealth is the first large FCA matter in which the new Trump Department of Justice has decided to intervene, so for those in doubt as to whether FCA enforcement would continue at the record-setting pace initiated under the Obama administration, wonder no more—it will.
The FisherBroyles Pharmacy and Health Care Law team will continue to follow the UnitedHealth case and communicate relevant updates. We offer complete compliance reviews for pharmacies and healthcare entities across the U.S. Please contact any of the following attorneys for assistance:
Brian E. Dickerson
Nicole Hughes Waid
[i] The U.S. Department of Justice only intervened in the suit against UnitedHealth and WellMed on issues of chart reviews, claims verification, a coding compliance program, and risk adjustment attestations. It reserved the right to join the case against other defendants at a later date.