Client Alert – Judge Rules that $1 Billion False Claims Act Suit against UnitedHealth can Proceed

Feb 14, 2018
  • FisherBroyles News
  • Health Care

Earlier this week, a federal court judge in California shot down UnitedHealth Group Inc.’s (UnitedHealth) attempt to dismiss a whistleblower’s suit claiming that UnitedHealth had wrongly retained more than $1 billion from the Medicare program after submitting invalid diagnostic data for patients enrolled in Medicare Advantage Plans from 2011 through 2014.

The Department of Justice (DOJ), which has intervened in the suit, rests its theory of False Claims Act (FCA) liability on the argument that UnitedHealth violated the FCA by failing to repay Medicare after learning that some patient diagnoses codes were invalid and exaggerated the level of patients’ illnesses – resulting in substantial overpayments to the company. UnitedHealth, however, argued that the billing problems were not material (and therefore not violations under the FCA), given that the Centers for Medicare and Medicaid Services (CMS) had continued making payments despite being on notice that some of the billing codes were incorrect.

U.S. District Judge Michael Fitzgerald decided against UnitedHealth, indicating that, “the government has adequately pled facts showing that [UnitedHealth] knowingly avoided obligations to repay [Medicare Advantage] by failing to delete invalid diagnosis codes, and that such failure was material.” This ruling appears to carve out new territory in FCA liability – finding a lower threshold for “materiality” than previously held by the courts.

The judge, however, did dismiss some of the government’s claims related to alleged false attestations regarding the data’s validity, deciding that it was not demonstrated that those assurances had affected payment decisions by CMS. The attestations involved the direct submission of allegedly fraudulent claims, as opposed to UnitedHealth’s failure to return overpayments.

UnitedHealth has indicated that it will continue to challenge the DOJ’s remaining claims as the suit proceeds.

The case is U.S. ex rel. Poehling v. UnitedHealth Group Inc et al, U.S. District Court, Central District of California, No. 16-cv-08697.

The health care and pharmacy legal team at FisherBroyles will keep you apprised of the progress of this case and the issues surrounding “materiality” as this case makes its way through the courts. We welcome your questions on all issues of federal and state health care law compliance and the False Claims Act. Please contact any of the following attorneys:

Brian Dickerson, FisherBroyles Partner
Brian E. Dickerson
[email protected]

Anthony Calamunci, FisherBroyles Partner
Anthony Calamunci
[email protected]

Nicole Waid, FisherBroyles Partner
Nicole Hughes Waid
[email protected]

Amy Butler, FisherBroyles Partner
Amy Butler
[email protected]

Katy Wane, FisherBroyles Partner
Katy Wane
[email protected]

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