28 June 2019

Sutter Health Files Motion to Dismiss Criticizing DOJ’s Outdated FCA Theories in Medicare Advantage Case

On June 14, 2019, Sutter Health (“Sutter”) filed a Motion to Dismiss the Department of Justice’s Complaint-in-Intervention in a False Claims Act suit alleging Sutter knowingly submitted and caused the submission of unsupported diagnoses codes for Medicare Advantage patients in order to inflate Medicare reimbursements.  The Department of Justice filed its Complaint-in-Intervention on March 4, 2019, which we previously discussed here.

Sutter’s motion sought an order to dismiss the government’s complaint in its entirety for failure to state a claim as required by F.R.C.P. 12(b)(6).  Specifically, Sutter contends that the government failed to allege false claims or unlawfully retained overpayments under Medicare Advantage’s comparative standard, that the government failed to allege with particularity that Sutter identified any overpayments or knowingly submitted false claims or statements, and that the government failed to allege with particularity that any falsity in Sutter’s certifications would have been material to the government’s decision to pay.

Sutter’s motion primarily relies on the decision by the United States District Court for the District of Columbia in UnitedHealthcare Insurance Co. v. Azar, 330 F. Supp. 3d 173 (D.D.C. 2018), which vacated a portion of CMS’s 2014 Final Overpayment Rule applicable to the Medicare Advantage program, previously discussed here.  Citing Azar, Sutter argues that the government’s case “rests on an outdated conception of the Medicare Advantage program that federal courts have repeatedly rejected” and that the government has mistakenly tried to “wedge its Medicare Advantage case into the traditional Medicare framework.”  According to Sutter’s motion, the government “must allege more than just erroneous diagnosis codes to show that Defendants were overpaid”; it must also allege “that the prevalence of unsupported diagnosis codes in Defendants’ Medicare Advantage submissions exceeds the prevalence of such codes in traditional Medicare.”  According to the motion, the DOJ’s complaint-in-intervention “does not and cannot make that essential allegation.”

Relying on recent decisions in United States ex rel. Poehling v. UnitedHealth Group, Inc., No. CV 16-08697, 2018 WL 1363487 (C.D. Cal. Feb. 2, 2018) and United States ex rel. Swoben v. Scan Health Plan, CV 09-5013, 2017 WL 4564722 (C.D. Cal. Oct. 5, 2017), Sutter further argues that the government failed to make “other key allegations” regarding whether Sutter knowingly violated the law and whether any alleged false certifications were actually material to the government’s payment decisions.

Sutter’s Motion reflects the industry’s continued resistance to DOJ’s enforcement under the FCA on the basis of potentially unsupported diagnoses codes for Medicare Advantage beneficiaries, without more.  We will continue to monitor and provide updates on these issues as they develop.

A copy of Sutter’s Motion can be found here.

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