District Court Relies on Azar’s Overruling of Overpayment Rule to Deliver Another Blow to DOJ’s MA Enforcement Efforts

On March 29, 2019, the United States District Court for the Central District of California denied the Department of Justice’s Motion for Partial Summary Judgment against UnitedHealth Group (“United”) in a False Claims Act suit alleging that United knowingly retained overpayments for unsupported diagnosis codes submitted for Medicare Advantage patients.  In reaching its decision, the Court relied on the decision by the United States District Court for the District of Columbia to vacate a portion of CMS’s 2014 Final Overpayment Rule applicable to the Medicare Advantage program in UnitedHealthcare Insurance Co. v. Azar, 330 F. Supp. 3d 173 (D.D.C. 2018), which we previously discussed here.

The government’s motion requested that the Court grant summary judgment on the issue of whether United was required by regulation or contract to delete diagnosis codes that it knew were unsupported by the patients’ medical records.  United argued, as it did in Azar, that requiring MA organizations to delete unsupported codes for the purposes of calculating risk scores would violate the Medicare Act’s requirements of actuarial equivalence and same methodology.  The Court denied the motion and found that, “in light of the competing regulatory, statutory, and contractual requirements,” it could not determine “that it is clear as a matter of law that United was required to delete unsubstantiated diagnosis codes.”  In reaching this decision, the Court relied heavily on the D.C. District Court’s decision in Azar, which found that the 2014 Final Overpayment Rule violated the statutory mandates of same methodology and actuarial equivalence.  While the Court noted that the ruling in Azar has been appealed, the Court devotes three paragraphs to summarizing the ruling and twice states that it views Azar as “persuasive authority.”


While the Court’s decision does not resolve the ongoing uncertainty of the future of FCA enforcement in the Medicare Advantage space after Azar, the Court’s decision further calls into question DOJ’s ability to bring FCA cases against MA plans on the basis of potentially unsupported diagnosis codes for Medicare Advantage beneficiaries.  Despite these recent setbacks, however, DOJ continues to take aggressive enforcement action in the Medicare Advantage space, as evidenced most recently by its intervention against Sutter Health in March 2019, discussed here.  We will continue to monitor and provide updates on these issues as they develop.

A copy of the court’s order can be found here.