UnitedHealth Investors Can Access Alleged Medicare Fraud Records

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By Jacob Rund

UnitedHealth Group Inc. shareholders can scour 12 years of the insurer’s records to support claims that its directors played a part in an alleged Medicare fraud perpetrated by the company, a Delaware judge decided.

The investors—two pension funds and one bank—filed suit in 2017 after UnitedHealth rejected their initial requests for the information, which relates to an ongoing federal lawsuit accusing the company of filing thousands of false Medicare claims.

The investors demonstrated a “proper purpose” for demanding access to certain internal records by claiming they might show UnitedHealth’s directors knew about, or signed off on, the alleged fraud, Chancery Court Judge Tamika Montgomery-Reeves said Feb. 28.

The shareholders “have shown a credible basis to infer wrongdoing” on the part of UnitedHealth’s directors, Reeves wrote.

Reeves granted access to most of the requested documents, including written materials produced for certain board meetings, and records used during the company’s director-nomination process. However, she said the investors didn’t meet their burden of showing email communications from five senior-level officers were necessary to their investigation.

UnitedHealth intends to appeal the court’s ruling, spokesman Matthew Burns told Bloomberg Law. “Many of these meritless claims were already rejected in other proceedings,” he said in an email.

Reliance on Federal Lawsuit

The investors based their claims against UnitedHealth directors on a 2011 whistleblower lawsuit filed by a former company executive, who accused his former employer of failing to alert Medicare officials about their alleged false claims.

The Justice Department, which took over the case, conducted a five-year investigation into the Medicare overbilling allegations. That investigation led to the production of more than 600,000 documents, including internal emails and audit reports, according to Reeves’ opinion.

The evidence collected during the federal case suggests UnitedHealth “did not engage in steps to correct inaccuracies or alert Medicare” of certain billing inconsistencies, Reeves wrote. She also cited the fact that UnitedHealth removed audit programs “designed to catch inaccuracies.”

Reeves granted the insurer’s request that any documents it must produce be subject to a reasonable confidentiality order.

The case is In re UnitedHealth Grp., Inc. Section 220 Litig. , 2018 BL 67571, Del. Ch., Consolidated C.A. No. 2017-0681-TMR, 2/28/18 .

To contact the reporter on this story: Jacob Rund at jrund@bloomberglaw.com

To contact the editor responsible for this story: Yin Wilczek at ywilczek@bloomberglaw.com

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