The question of when an overpayment becomes “identified” for purposes of False Claims Act liability has generated significant uncertainty, and one district court just added more fodder for debate. See UnitedHealthcare Ins. Co. v. Price, No. 16-cv-157 (D.D.C. Mar. 31, 2017). The Affordable Care Act (“ACA”) requires persons to report and return overpayments from Medicare or Medicaid within 60 days of identification, and the failure to do so can trigger FCA liability. The ACA delegated to CMS the task of defining when an entity has “identified” an overpayment. CMS promulgated two rules (in May 2014 for Medicare Advantage (“MA”) plans and Part D Sponsors and in February 2016 for Medicare Part A/B providers), which equate “identification” to circumstances in which a person “has, or should have through the exercise of reasonable diligence, determined that the person has received an overpayment.” The “should have identified” standard generated concerns that CMS was using a simple negligence standard. The FCA, however, requires proof of at least “reckless disregard,” which courts have equated to gross (not merely simple) negligence.
On February 16, 2017, the Department of Justice (“DOJ”) intervened in a False Claims Act (“FCA”) lawsuit against UnitedHealth Group, Inc. (“UnitedHealth” or “the defendant”), which alleges, among other things, that UnitedHealth “engaged in a widespread scheme to knowingly submit, or cause to be submitted, false claims for payment to the United States by submitting false ‘risk adjustment’ information to the Centers for Medicare & Medicaid Services (‘CMS’) in order to improperly increase the amounts CMS pays them or their clients.” United States ex rel. Poehling v. UnitedHealth Grp., C.D. Cal., No. 11-cv-0258-A, unsealed 2/16/17.
A court in the Central District of California recently granted in part and denied in part the motions to dismiss of defendants—multiple Medicare Advantage (“MA”) plans and a home health assessment company—in a suit alleging that the sickness of patients had been inflated through illegitimate in-home assessments. See United States ex rel. Silingo v. Mobile Med. Examination Servs., No. 13-cv-01348 (C.D. Cal. Sept. 29, 2015). The case is one further development in the broader ongoing enforcement effort against private Medicare insurers (as reported here), and highlights the scrutiny by CMS of the role in-home assessments play in the MA program.
Posted by Scott Stein and Brenna Jenny
A district court in the Southern District of Florida recently denied motions to dismiss filed by a Medicare Advantage (“MA”) plan and MA providers in a case alleging upcoding through fraudulent diagnosing. See United States ex rel. Graves v. Plaza Med. Ctrs. Corp., No. 10-cv-23382 (S.D. Fla. July 6, 2015). The case is one of a growing number of qui tam cases in the Medicare Advantage sphere, mirroring heightened congressional pressure on CMS and DOJ to take steps to combat Medicare Advantage fraud (as previously reported here).
On May 19, Senator Charles Grassley sent letters to Attorney General Loretta Lynch (here) and to the Acting Administrator of CMS (here) demanding information concerning fraud investigations involving Medicare Advantage plans. The letters cite news reports suggesting that some Medicare Advantage plans are fraudulently manipulating risk scores, which reflect the acuity of their patient populations are used to determine reimbursement from CMS. Asserting that “risk score gaming [has] caused approximately $70 billion in improper Medicare Advantage payments,” Senator Grassley requests that CMS and DOJ articulate what steps they are taking to address fraudulent altering of risk scores, how many investigations of risk score fraud have been conducted within the last five years, and what administrative or enforcement actions have been taken to address risk score fraud.
These letters are significant because Senator Grassley is Chair of the Senate Judiciary Committee, one of the architects of the modern False Claims Act, and a founder of the recently-formed Senate Whistleblower Protection Caucus. While there have been relatively few unsealed False Claims Act cases against Medicare Advantage plans, we expect the volume of such suits to accelerate over the coming years as federal spending continues to increase.