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October 10, 2017

Federal judge dismisses lawsuit alleging UnitedHealth overcharged MA

Daily Briefing

    A federal judge in California on Thursday dismissed a lawsuit alleging that UnitedHealth Group fraudulently inflated patient risk scores to improperly receive higher reimbursements from Medicare Advantage (MA).

    Under MA's risk adjustment program, beneficiaries who have more chronic conditions have higher risk scores, and MA insurers that cover such beneficiaries receive higher payments from the government. According to Modern Healthcare, the Department of Justice (DOJ) is investigating several large insurers over the alleged practice of upcoding in the MA program.

    Lawsuit details

    DOJ in March joined the whistleblower lawsuit against UnitedHealth. The suit alleged that the insurer violated the False Claims Act (FCA) by inflating patient risk scores for UnitedHealth enrollees in California in ways that were not supported by patients' medical records. DOJ claimed that UnitedHealth had been engaging in the practice of so-called upcoding since at least 2005 to receive larger reimbursements under MA's risk adjustment program.

    UnitedHealth in July had requested the case be dismissed, arguing that DOJ "fail[ed] properly to plead two elemental aspects of its claims:

    • That United knowingly submitted false attestations; and
    • That the government would have refused to pay United's claims if it had know[n] of the truth."

    UnitedHealth argued, "Those failings are not careless errors," adding, "Rather, they reflect the broader problem with the DOJ's case, which is that it has attempted to turn a well-known, good-faith disagreement about the meaning of regulatory and statutory language into a False Claims Act suit."

    Judge dismisses case

    U.S. District Judge John Walter for the Central District of California on Thursday ruled that DOJ's allegations were too vague for the case to move forward.

    Walter said DOJ's complaint failed to name any corporate officials who signed documents confirming the accuracy of the data UnitedHealth submitted to MA. In addition, Walter said DOJ in the suit did not identify any corporate officials who were aware the information the insurer had submitted to MA was false.

    In addition, Walter said the allegations DOJ made in the lawsuit were only material in a "conclusory" manner, noting that DOJ did not show whether MA would have refused to pay reimbursements to UnitedHealth had it been aware of the insurer's alleged misconduct.

    Walter gave DOJ until Oct. 13 to amend the lawsuit. According to Modern Healthcare, the additional time allows DOJ to further support claims included in the suit that relate to alleged misconduct occurring after May 1, 2007.


    According to Reuters, DOJ on Friday had no immediate comment on the lawsuit and UnitedHealth on Friday declined to comment on the case.

    Matt Curley, a partner at the law firm Bass Berry & Sims, said, "The district court's decision obviously is a significant setback for DOJ."

    However, William Horton, a partner at the law firm Jones Walker, said, "The judge's order is pretty clear about what it would take to amend the complaint in a way that would pass muster, and if DOJ can assemble the relevant details, an amendment would not seem difficult"  (Raymond, Reuters, 10/6; Grayson, Minneapolis/St. Paul Business Journal, 10/6; Teichert, Modern Healthcare, 10/6; Minemyer, FierceHealthcare, 10/6; Snowbeck, Star Tribune, 7/14).

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