A federal appeals court Wednesady breathed new life into a civil lawsuit that alleges some of the nation’s largest health insurers have been systematically fleecing the government.
In a published opinion, the U.S. Court of Appeals for the Ninth Circuit said that whistle blower James Swoben made a strong case that such major insurers as UnitedHealthcare, HealthCare Partners and Aetna violated the False Claims Act by skewing their reporting of patient health data to draw bigger government payments.
Swoben has “adequately alleged that the defendants’ [Medicare] certifications were false and stated a cognizable legal theory under the False Claims Act,” Circuit Judge Raymond Fisher wrote.
The suit was filed in 2009 by Swoben, a former employee of a California health plan provider called SCAN, as a qui tam action against that company and a host of other insurers that participate in what is called Medicare “Part C,” or Medicare Advantage.
Medicare Advantage allows qualifying patients — who are usually 65 or older — to obtain coverage through a private provider rather than directly through the government’s Centers for Medicare & Medicaid Services, or CMS. In turn, CMS pays a per-enrollee premium to those private insurers. The premium is calculated using “risk adjustment data,” factoring in things like chronic illnesses, which causes the dollar amount to go up or down.
Insurers regularly conduct retrospective reviews of the risk data submitted to CMS. But Swoben alleges that the systems the insurers have set up are designed only to report those factors that would increase payments, and not to catch over reporting errors that might cause the payments to go down.
The government intervened and prosecuted claims against SCAN, which was also alleged to have defrauded California’s Medi-Cal program over more than 20 years using different means, but not the other defendants. SCAN settled the case in 2012 for roughly $322 million.
This case, which according to Swoben’s attorney involves more than $1 billion in alleged over payments, drew high-octane defense counsel in the Ninth Circuit: Latham & Watkins for UnitedHealthcare; Gibson, Dunn & Crutcher for Aetna; O’Melveny & Myers for WellPoint Inc.; and Hogan Lovells for HealthCare Partners, which was acquired in 2012 by the dialysis chain DaVita Inc.
Insurers participating in Medicare Advantage are required to certify the accuracy and completeness of their submissions. “We do not see how a Medicare Advantage contractor who has engaged in” deliberately one-sided reviews “can in good faith certify that it believes the resulting risk adjustment data reported to CMS are accurate, complete and truthful,” Fisher wrote.