UnitedHealth pushes back in whistleblower case

UnitedHealth Group is pushing back against a federal whistleblower case, alleging the Justice Department's arguments would mean the agency that runs the federal Medicare program has broken its contract with the giant health insurance company.

In early 2017, the federal government joined a whistleblower lawsuit from a former UnitedHealth Group employee in the Twin Cities who alleged, among other things, that the nation's largest insurer had wrongly received excess Medicare revenue by reviewing medical charts to boost payments without also making data corrections that would have saved the government money.

In a filing last month, United said that if the Justice Department's argument is right — and UnitedHealth Group was required to perform "two-way looks" at medical charts — then the federal agency that runs Medicare "negligently misrepresented" what was required of the insurer.

United's counterclaim follows a federal judge's dismissal of a number of the Justice Department's claims in the case — a move that was arguably a partial win for both sides, said Seth Whitelaw of Mitchell Hamline School of Law. If substantiated, the counterclaim arguments could factor into negotiations, legal experts say, over any possible settlement in the case.

"I think at the end of the day, as the case continues to move forward, you are going to see some money change hands," Whitelaw said, "Exactly how big that number will be, I have no idea."

In 2011, former employee Benjamin Poehling alleged in a whistleblower lawsuit that UnitedHealth Group and health plans that hired a subsidiary of the Minnetonka-based health care giant had submitted false information about patient conditions to boost Medicare payment rates.

The company's UnitedHealthcare insurance division is the nation's largest provider of Medicare Advantage health plans, where the government pays insurers monthly fees per-member to manage care for beneficiaries. The payments can be increased based on a risk adjustment process in which insurers supply data about the health status of members.

In November, the Justice Department listed six claims against UnitedHealth Group in an amended complaint in the civil fraud action. The government argued that had UnitedHealth Group "looked both ways" in chart reviews to withdraw invalid diagnosis codes, Medicare would not have erroneously paid or would have recovered "potentially over a billion dollars in risk adjustment payments for four payment years."

"Defendants knowingly submitted false claims and made false statements to the Medicare Program," the complaint stated. "Moreover, Defendants have knowingly and improperly avoided their obligations to repay significant sums of money to the Medicare Program."

UnitedHealth Group in December moved to dismiss the case, saying the government hadn't shown that the federal Centers for Medicare and Medicaid Services (CMS) would have denied the risk adjustment payments had it known the alleged facts. In fact, the insurer argued, CMS has known about errors in coding data submitted by United and other insurers, yet never once sought to withhold payment.

"Senior officials at CMS have acknowledged that the theory [the Justice Department] is pressing here would, if correct, result in Medicare Advantage plans being underpaid for the insurance risk they assume from CMS," the insurer argued. "[The Justice Department] cannot override that authority by converting an alleged regulatory violation the client agency itself has deemed immaterial into a vehicle for imposing draconian penalties and fines."

In dismissing three of the government's six claims, U.S. District Judge Michael Fitzgerald said in February that the Justice Department failed to show the alleged facts connected to attestations about risk adjustment data were material to CMS's decision on making payments. In two of the remaining claims, Fitzgerald gave the Justice Department an opportunity to refile the claims, but the government opted not to do so.

Legal experts differ on whether the judge's narrowing of the case amounted to a victory for UnitedHealth Group.

Ben Waldin, an attorney with the Eimer Stahl law firm in Chicago, said the ruling means the Justice Department can go after only those payment claims that were false, as opposed to all claims covered by attestations.

"If it stands as-is, and the government doesn't appeal, then I would say it's certainly a victory on UnitedHealth's part in terms of limiting the scope of the damages that they're potentially on the hook for," Waldin said.

But Sara Lord, an attorney with Arnall Golden Gregory LLP, said that sometimes when the government is forced to trim a false claims case, the complaint gets better with focus.

"It's more granular, I would agree with that," Lord said in an interview. "But in that sense, it's more straightforward."

The broader context is that Medicare regulations are complicated and somewhat ambiguous, Horton said, leaving discretion for CMS when it comes to interpreting and enforcing the rules. It's not uncommon for companies in false claims cases to argue they relied on informal guidance from the agency on how to interpret the rules, he said, only to find themselves at-risk for having done so.

The counterclaim suggests that UnitedHealth Group is "not in a posture of rolling over and saying: 'OK, let's talk about how much it's going to take to put this to bed,' " Horton said. Even so, he said a settlement remains the likely outcome.

"I think this is more trying to position the relative strengths and weaknesses of each side's case," Horton said. "And I expect that will lead, ultimately, to serious settlement discussions. But these are both parties with a lot of money, so they may fight for a while."