Recent press coverage misleadingly suggested that the ruling was a serious setback to the government’s suit, which is not the case.

On Feb. 12, 2018, a federal judge in the Central District of California issued his ruling on the UnitedHealth Group’s (UHG) motion to dismiss the government’s complaint in one of the largest False Claims Act (FCA) cases to date involving the Medicare managed care program. 

In his ruling, the judge denied UHG’s motion to dismiss as to some of the government’s claims and granted UHG’s motion as to others, while providing leave for the government to amend its complaint to resuscitate the latter claims. The net effect of the judge’s ruling, therefore, is that the government’s case against UHG is allowed to proceed, and the litigation continues. This point bears particular emphasis here, since much of the press coverage over the past few weeks has misleadingly suggested that the ruling was somehow fatal and/or a serious setback to the government’s suit, which is not the case.

A quick reminder on what this case is all about: In this case against UnitedHealth Group and its data arm, Optum, the United States is alleging that UHG submitted false diagnosis codes to the Centers for Medicare & Medicaid Services (CMS) to garner higher reimbursement rates. The alleged fraud was brought to light by whistleblower Benjamin Poehling, a former employee in the finance department of UHG’s Medicare and retirement division.

Medicare Part C reimburses insurers based on the demographics and health status of the population of CMS beneficiaries they insure in the form of a capitation rate. (This is distinct from Medicare Parts A and B, dubbed “fee-for-service” or “traditional” Medicare, which reimburses healthcare providers for services they provide.) Under Medicare Part C, insurers generally receive higher payments for covering sicker beneficiaries, regardless of what services they actually provide to those beneficiaries. Under the program’s rules, for a diagnosis to be valid it must have come from a face-to-face encounter with a qualified provider type in the given year of service, and also the diagnosed condition must have been treated or affected treatment. Also, Part C plans must submit an annual attestation, signed by the plan’s chief executive officer (CEO) or chief financial officer (CFO), certifying that all data submitted to CMS was truthful, accurate, and complete.

According to the U.S. Department of Justice (DOJ), after submitting to CMS diagnoses it received from providers, UHG then went back into patient charts and hired medical coders to do “blind” chart reviews, meaning that coders were asked to write down all diagnoses codes supported in the charts. UHG then also submitted those codes to CMS for reimbursement. The government alleges UHG generally did not delete provider-generated codes that were not supported by its chart reviews, instead only adding new codes its reviewers discovered. For example, according to the government’s complaint, if a provider submitted diagnosis codes 1 and 2, and the chart reviewer found codes 2 and 3, UHG would submit codes 1, 2, and 3, even though UHG had knowledge of code 1 being highly suspect, since it failed an audit. UHG did this on a massive scale, the government alleges, with the chart review program generating hundreds of millions of dollars a year for UHG. Additionally, UHG executives are alleged to have signed annual attestations certifying all data as truthful, accurate, and complete despite knowledge of the massive chart review program. The complaint notes that, for just dates of service (DOS) years 2010 to 2013, United should have deleted over a billion dollars in false diagnosis codes. The allegations in the complaint cover DOS years 2008 to present.

Defendants moved to dismiss the government’s complaint based on materiality, arguing that potentially false codes and potentially false attestations would not affect the government’s decision to pay UHG based on the data and therefore were not material. Defendants also argued that CMS knew all about their data-mining programs and did not cease payment. The federal judge ruled that the diagnoses submitted to CMS were material, but that DOJ inadequately pled to the materiality of the annual attestations, noting that DOJ did not allege that CMS would have stopped payment if it knew an attestation was false.

Although the dismissal was without prejudice, the government recently notified the court it would not seek to amend its complaint, instead proceeding on the claims remaining in the government’s complaint.

Next up is a scheduling conference at which the judge is expected to provide a date for when this important matter will proceed to trial.


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