UnitedHealth Filing Reflects DOJ’s Heightened Fraud Focus

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By Eric Topor

The DOJ’s intervention into a fraud lawsuit against UnitedHealth Group is the latest warning to Medicare Advantage (MA) insurers that their practices are being scrutinized for possible wrongdoing ( United States ex rel. Poehling v. UnitedHealth Grp. , C.D. Cal., No. 16-cv-8697, unsealed 2/16/17 ).

Tim McCormack, an attorney representing whistle-blower Benjamin Poehling, said the intervention in the False Claims Act lawsuit is a signal that the Department of Justice is looking at this area, and this particular type of fraud, closely. McCormack, a partner with Constantine Cannon LLP in Washington, told Bloomberg BNA Feb. 17 that the DOJ’s action shows that insurers “can’t turn a blind eye to false claims” that they’ve submitted.

Stradling Yocca Carlson & Rauth PC shareholder Jason de Bretteville, who leads the firm’s white-collar criminal defense practice, told Bloomberg BNA Feb. 17 the DOJ’s civil division “significantly expanded FCA enforcement in the healthcare industry under [the] Obama [administration],” including against upcoding practices. De Bretteville said the DOJ’s intervention against UnitedHealth “appears to be more of a continuation of this enforcement trend,” and not necessarily an indication of the Trump administration’s health-care fraud priorities.

Poehling alleged that UnitedHealth submitted risk adjustment claims to Medicare Advantage and Part D that included nonexistent diagnoses, upcoded diagnoses indicating more severe conditions than exhibited by beneficiaries, and diagnoses that were already treated in years past. Medicare Advantage pays insurers more on a per-beneficiary basis for patients who exhibit more severe diagnoses; Poehling claimed that each additional diagnosis added to a beneficiary’s medical record resulted in an additional $3,000 in Medicare reimbursement per year for that patient.

Poehling said UnitedHealth purposefully used internal claim audits to look for and correct only those patient diagnosis codes that were undercoded to less severe symptoms than existed, but purposely ignored any audit results that showed an incorrect overcoding, and failed to return Medicare overpayments that resulted from overcoded claims as required by Medicare.

“We reject these more than five-year-old claims and will contest them vigorously,” a UnitedHealth spokesman said in a statement. “We are honored to serve millions of seniors through Medicare Advantage, proud of the access to quality health care we provided, and confident we complied with the program rules,” the company added.

Coding Enforcement at CMS

John Gorman, executive chairman of the Gorman Health Group in Washington, told Bloomberg BNA Feb. 17 that the DOJ’s actions show there will be “a lot more scrutiny of diagnostic coding” from MA insurers, and “more audits conducted” by the Centers for Medicare & Medicaid Services. Gorman added that the new administration “could change policy to make this practice [of upcoding] more punitive.”

Gorman said a possible indicator of whether the Trump administration, and new secretary of the Department of Health and Human Services Tom Price, are serious about combating MA fraud would be whether the HHS tightens risk data rules in the final 2018 Medicare Advantage and Part D Advance Notice to MA insurers. A draft notice, which Gorman said would’ve been authored largely by Obama administration hold-over staff, was issued Feb. 3. Tom Price, however, will have the opportunity to “put his fingerprint on it” when the final notice is issued April 3, Gorman said.

De Bretteville added that "[t]he focus on Medicare Advantage data appears to be an attempt to achieve enforcement efficiency by focusing investigative resources on insurer activity, which can capture large swaths of Medicare claim submission activity.”

Constantine Cannon partner Mary Inman in San Francisco also represents Poehling and told Bloomberg BNA that other MA insurers should be taking a “very close look at how they handle their risk adjustment program” and ensure they are not using some of the “one way look” practices that UnitedHealth was alleged to have employed.

Earlier Litigation Signals

Several other FCA lawsuits concerning MA insurers and their risk adjustment practices are ongoing as well, including another lawsuit against UnitedHealth brought by whistle-blower James M. Swoben ( United States ex rel. Swoben v. Scan Health Plan, C.D. Cal., No. 09-cv-5013, filed 7/13/09 ). Swoben’s lawsuit was revived by the U.S. Court of Appeals for the Ninth Circuit in an August 2016 ruling after an earlier trial court dismissal ( 156 HCDR, 8/12/16 ).

Inman said Poehling is the first whistle-blower bringing FCA allegations of this nature who is a true insider of an MA insurer defendant. Inman said other whistle-blowers who’ve made allegations concerning MA risk adjustment practices have been physicians, or persons employed by vendors contracting with an insurer. Poehling is the first “director level executive” whistle-blower, she noted.

Poehling was the director of finance for a UnitedHealth subsidiary that worked closely with another UnitedHealth subsidiary, OptumInsight (previously Ingenix until 2011,) which provides data consulting services to UnitedHealth and other insurers and providers.

Health insurer Humana is also facing a whistle-blower’s FCA lawsuit over allegations the insurer submitted improperly upcoded MA claims ( United States ex rel. Graves v. Plaza Med. Ctrs. Corp., S.D. Fla., No. 10–cv-23382, filed 9/17/10 ), and Humana disclosed in 2015 in a federal securities Form 10-K report that the DOJ requested information on its Medicare Advantage risk adjustment practices “separate from but related to” an ongoing False Claims Act lawsuit.

Humana is also named as a defendant in Poehling’s complaint, but the DOJ’s intervention only extended to UnitedHealth and co-defendant WellMed Medical Management Inc., a health-care delivery network based in San Antonio. McCormack said Poehling and his counsel haven’t decided yet whether to continue pursuing claims against the defendants not included in the DOJ’s intervention.

Vendor Practices

Inman said insurers and providers should be inspecting not only their own risk adjustment practices, but also those of any vendors that have been contracted to perform these services, which could invite FCA liability as well. Inman said there is a “cottage industry of outsourcing these services, and it’s incredibly lucrative.”

Jessica T. Moore, also a partner with Constantine Cannon in San Francisco, told Bloomberg BNA insurers should also “listen to whistle-blowers and review what they are trying to bring to your attention.” Moore pointed out that Poehling said he was alerting UnitedHealth to improper coding practices for years before filing his FCA lawsuit. McCormack noted that UnitedHealth could’ve faced much less “potential exposure” had the company responded to Poehling’s warnings earlier.

Gorman said it’s difficult for MA plans to accurately collect diagnosis code data, noting that physicians inputting procedure codes relevant to the symptoms a patient is presenting at the moment might miss diagnosis codes that are relevant to the patient’s overall health and risk adjustment profile.

MA plans “get into trouble when they extract data from claims,” Gorman said. Gorman said diagnosis coding should be done by a coding specialist and the plan should “embed this function in medical management” procedures “so it’s part of improving patient care.” A byproduct will be more accurate coding and reimbursement, he said.

The Department of Justice and the U.S. Attorney’s Office for the Central District of California represent the government; Constantine Cannon LLP and Phillips LLP represent Poehling.

To contact the reporter on this story: Eric Topor in Washington at etopor@bna.com

To contact the editor responsible for this story: Peyton Sturges at psturges@bna.com

For More Information

The complaint is at http://src.bna.com/miU.

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