On October 5, 2017, the Honorable Judge John Walter of the United States District Court, Central District of California, granted the Defendants’ Motion to Dismiss the Medicare Advantage (“MA”) Federal False Claims Act (“FCA”) case of United States of America ex rel. Swoben v. Scan Health Plan, et al. (CV 09-5013-JFW (JEMx)) (the “Swoben Case”) (brought by qui tam relator James M. Swoben and joined by the Department of Justice (“DOJ”)). [1]

Although the ruling was undoubtedly well received by UnitedHealthcare (“UHC”), its parent company, UnitedHealth Group Inc. (“UHG”), and the other Swoben Case defendants, the defendants’ happiness with the dismissal may have been tempered because the ruling gives the DOJ an opportunity to amend and refile its complaint with the Court. Given the DOJ’s recent history of aggressively pursuing cases of potential fraud in the MA space, it is very likely that the DOJ will amend and refile its complaint in the near future.

The Swoben Case

As discussed in our February 23, 2017 blog post, “Justice Department Joins Whistleblower Suit Accusing UnitedHealth Group of Overcharging Medicare by “Hundreds of Millions,” the Swoben Case alleged that multiple MA organizations, including UHC, routinely performed retrospective reviews that were structured: (1) to identify services that were under-coded, allowing the organizations to up-code and, in turn, increase their payments under the HCC-RAF program[2] but (2) to avoid the identification of over-coded services that, if corrected, would decrease payments under the HCC-RAF program.

More specifically and as described in a May 2, 2017 release from the DOJ (the “DOJ Release”), “the [Swoben] lawsuit contends that UHG funded chart reviews to increase the risk adjustment payments received from the Medicare Program for its MA members. However, UHG allegedly ignored information from these chart reviews about invalid diagnoses and thus avoided repaying Medicare monies to which it was not entitled.”[3]

As it has in other FCA cases relating to the HCC-RAF program, the DOJ intervened in the Swoben Case. Then Acting Assistant Attorney General Chad A. Readler of the DOJ’s Civil Division is quoted, in the DOJ Release, as saying, “the intervention of the United States in this matter illustrates our commitment to ensure the integrity of the [Medicare Advantage] program.”

Not A Passing Fad

As noted in our February 23, 2017 blog post, as evidenced by multiple enforcement actions that have emerged during the last few years (e.g., United States of America ex rel. Olivia Graves v. Plaza Medical Centers Corp., et al., 1:10-cv-23382-FAM (a lawsuit against Humana alleging that Human had encouraged physicians to inflate patient risk scores); United States of America ex rel Benjamin Poehling v. UnitedHealth Group Inc., No. 16-08697 (Cent. Dist. Cal. Sep. 17, 2010), ECF No. 79 (a lawsuit against UHG and its subsidiary, UnitedHealthcare Medicare & Retirement, alleging multiple fraudulent activities relating to the HCC-RAF program; the number of allegations materially exceed the number of allegations included in the Swoben Case); and other HCC-RAF cases brought under the FCA), the government’s interest in MA fraud enforcement and HCC-RAF enforcement does not appear to be a passing fad.

[1] The Order is available here.

[2] MA plans with capitated payments which are identified by the applicable diagnostic classification codes called “Hierarchical Condition Categories” (HCC). The payments are risk-adjusted for patient health and complexity through “Risk Adjustment Factors” (RAF) that reflect financial utilization and risk. Because of the RAF adjustments, MA plans receive increased reimbursement for the treatment of sicker patients, i.e. patients who cost more to treat.

[3] The release, “United States Intervenes in False Claims Act lawsuit Against UnitedHealth Group Inc. for Mischarging the Medicare Advantage and Prescription Drug Programs,” is available here.