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Suit Against UnitedHealth Medicare Advantage Plan Is Tossed by Federal Judge

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A federal judge in California dismissed the U.S. government’s lawsuit alleging that UnitedHealth Group Inc. violated the False Claims Act by receiving inflated payments based on untruthful and inaccurate information about the health status of beneficiaries enrolled in the company’s largest Medicare Advantage Plan, UHC of California.

But U.S. District Judge John Walter of the Central District of California gave the government until Friday to amend its complaint and strengthen the allegations.

Walter describes the complaint as a “classic shotgun pleading” that failed to identify any corporate officers who attested to the truthfulness of the information submitted to Medicare or to allege that any of those employees knew or should have known that the information was false.

(Related: Wichmann to Take Over as UnitedHealth CEO)

The judge also found that the federal government failed to prove that Medicare Advantage payments would not have been made had the U.S. Centers for Medicare & Medicaid Services been aware of the conduct alleged in the suit.

Mischarges to the Medicare C prescription drug program represent a relatively new area of False Claims activity. This case is one of two against UnitedHealth in which the government partially intervened in May. The other case, which sets forth similar allegations, remains pending in the federal court in Los Angeles.

Medicare Advantage allows qualifying patients—who are usually 65 or older—to obtain coverage through a private provider rather than directly through 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, the federal government in its lawsuit has alleged that the systems the insurers have set up are designed to produce so-called one-sided reviews. They allege the reviews report only those factors that would increase payments, and do not catch over-reporting errors that might cause payments to go down.

—-Read MedPAC Measures Medicare Advantage Risk Score Inflation on ThinkAdvisor.

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