Recent intervention by the U.S. Department of Justice (DOJ) into a whistleblower lawsuit filed by a relator on behalf of the United States against UnitedHealth Group Inc. (UHG) demonstrates the government is taking a more active role in combating healthcare fraud and billing practices, particularly involving managed care providers.

The suit, filed by UHG’s former finance director under the False Claims Act (FCA), alleges that since at least 2006, UHG obtained inflated payments for its Medicare Advantage patients by manipulating clinical data to cause the Centers for Medicare and Medicaid Services (CMS) to pay a higher monthly amount for members’ care.  The suit also alleges UHG retained overpayments related to inflated risk adjustment payments that it “knowingly” failed to correct. The suit alleges that UHG overcharged the government “hundreds of millions—and likely billions—of dollars.”

An FCA violation occurs when a claimant “knowingly” submits a false or fraudulent claim for money or property to the government. “Knowingly” includes “reckless disregard” or “deliberate ignorance” of the truth. FCA violations may also occur when a claimant conceals or avoids an obligation to pay money or property to the government. The complaint was filed under FCA’s qui tam provision, which allows private citizens (known as “whistleblowers”) to file complaints on behalf of the government against those suspected of defrauding federal programs.

The FCA imposes significant financial penalties for defrauding federal government programs. Individuals or companies who violate the FCA are liable for up to three times the government’s actual financial losses and a mandatory civil penalty of up to nearly $ 22,000 for each false claim.   A relator is entitled to between 15 and 30 percent of moneys recovered.

On May 16, 2017, the DOJ intervened in the relator’s FCA case (U.S. ex rel. Benjamin Poehling v. UnitedHealth Group Inc. et al., C.D. Cal., No. 16-cv-8697). While other managed care providers were also sued, the DOJ pursued only the claims against UHG.

Key takeaways:

1. DOJ intervention in this complaint comes in the wake of several other FCA whistleblower claims involving managed care providers. The government appears to be adopting a more aggressive stance towards potentially fraudulent billing by managed care providers.
2. Managed care providers should carefully assess any program or algorithm being used with diagnosis codes to ensure that claims are not purposefully or inadvertently upcoded.
3. Managed care providers must repay any identified overpayments within 60 days.
4. Managed care providers should not provide bonuses to employees or contractors tied to or based on increasing reimbursement from federal healthcare programs, which could appear to be illegal kickbacks to potential relators and/or government regulators.
5. UHG expressly certified to the government in an annual attestation that the risk adjustment information submitted was “accurate, complete and truthful.” Recent U.S. Supreme Court rulings have noted submission of such information, even without an explicit attestation, may imply a certification of compliance with all applicable laws, and thus any errors or inaccuracies found after submission could be grounds for FCA liability.

The health care practice group at Plews Shadley Racher & Braun LLP will continue to monitor developments and regularly works with physicians, dentists, nurses, physician assistants, and other health care providers to counsel on FCA and other regulatory issues.  Additional information about Plews Shadley Racher & Braun LLP and its health care practice is available at www.psrb.com.

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