DOJ Declines to Intervene in Risk Adjustment Qui Tam Suit Brought Against Numerous Medicare Advantage Plans

On March 6, 2020, the United States District Court for the Central District of California unsealed a qui tam complaint filed in May 2018 against Mobile Medical Examination (“MedXM”) and a number of Medicare Advantage Organizations (“MAOs), including, United Healthcare, Wellpoint, Aetna, Health Net, and Molina Healthcare.  The qui tam suit, which was brought by former employees of MedXM, alleged that the defendants engaged in a scheme to submit false claims for payment to the federal healthcare programs by inflating risk adjustment payments and providing kickbacks to MA enrollees.  The Department of Justice declined to intervene in the suit.

Relators’ complaint alleges that the MAOs sought reimbursement for non-covered, medically unnecessary in-home assessments and diabetic retinopathy exams performed by MedXM in order to identify ICD-10 diagnosis codes that could be submitted to CMS to inflate capitation payments.  Specifically, the MAOs contracted with MedXM to perform free in-home health assessments even though in-home services were specifically not covered under the MA plans. The MAOs also provided free diabetic retinopathy exams to MA enrollees that were not ordered by the patients’ treating physicians and were instead ordered by a contracted physician who never had any contact with any of the MA enrollees.  To induce MA enrollees to consent to these services, MedXM allegedly offered patients Amazon or Target gift cards on behalf of the MAOs.  Relators alleged that the provision of free services and gift cards violated the Anti-Kickback Statute.  Finally, Defendants allegedly made express and implied false certifications to CMS that the data it submitted were accurate, truthful, and complete, despite defendants’ knowledge that the diagnosis codes were submitted for excluded, non-covered, and medically unnecessary services that were conducted as part of an illegal kickback scheme.

Although DOJ declined to intervene in this case – despite its increasingly aggressive enforcement of the Medicare Advantage space under the FCA in recent years – this suit follows the increasing trend of whistleblowers pursuing claims that MAOs have violated the FCA through the submission of unsupported diagnosis codes.  We note that unlike those MA-based FCA matters in which DOJ has intervened, this suit does not allege a scheme to inflate diagnosis codes by conducting “one-way” chart reviews. We will continue to monitor this case as it progresses.

A copy of the complaint can be found here.