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August 01, 2017

Taking Advantage: The DOJ Intervenes in its First Two FCA Whistleblower Actions Against a Medicare Advantage Plan

Samuel M. Shapiro, Arnall Golden Gregory LLP, Washington, DC

In May 2017, the Department of Justice (DOJ) intervened in two whistleblower suits brought against UnitedHealth Group, Inc. (UnitedHealth), alleging that UnitedHealth violated the False Claims Act (FCA) by causing the Centers for Medicare & Medicaid Services (CMS) to pay artificially-inflated amounts in connection with the Medicare Advantage Program.1 These two cases, United States ex rel. Swoben v. Secure Horizons and United States ex rel. Poehling v. UnitedHealth Group, Inc., et al., represent the DOJ’s first interventions in whistleblower FCA cases involving Medicare Advantage.2

For years, federal officials from various government agencies, as well as a non-profit investigative journalism organization known as the Center for Public Integrity (CPI) have analyzed Medicare Advantage payment data and concluded that Medicare Advantage plans (MA Plans) are overpaid by the Medicare program. In this context, the DOJ’s intervention in these two whistleblower actions against the nation’s largest MA Plan may serve as a harbinger of increased focus and scrutiny of Medicare Advantage reimbursements.

The Medicare Advantage Program

Enacted in 2003, the Medicare Advantage Program, otherwise known as Medicare Part C, allows Medicare beneficiaries to receive benefits through private health plans as an alternative to Medicare’s traditional fee-for-service reimbursements under Parts A and B.3 The Program was intended to incentivize private insurance companies to participate in the market for health insurance for the elderly and disabled.4

Under the Medicare Advantage Program, CMS pays MA Plans a capitated (i.e., per enrollee) payment to provide medical benefits to enrollees.5 Capitated payments are fixed monthly and do not fluctuate based on the volume of services provided. However, CMS does adjust these monthly payments to reflect risk – that is, payments are adjusted on a monthly basis to reflect the health status of enrollees.6 To calculate these risk adjustments, CMS relies on diagnosis codes submitted by physicians and other healthcare providers to the MA Plans, which in turn submit the codes to CMS through the Risk Adjustment Processing System (RAPS).7 The government then uses these diagnosis codes (in combination with other information) to determine an enrollee’s “risk score,” which is used to adjust the base payment rate.8

In addition to undergoing CMS audits and establishing compliance programs, an MA Plan must, as a condition to receiving payment, certify that the risk adjustment data it submits to CMS is “accurate, complete, and truthful.”9 This certification requirement obligates MA Plans to conduct due diligence on the front end (and retrospective review on the back end) to ensure the accuracy, completeness, and truthfulness of the risk adjustment data submitted to CMS through RAPS.10 Such due diligence includes, among other things, (a) making certain that “[a]ll diagnosis codes submitted [are] documented as a result of a face-to-face visit” and that the diagnosis is “coded according to International Classification of Diseases, (ICD) Clinical Modification Guidelines for Coding and Reporting”; (b) implementing procedures to ensure that diagnoses are from acceptable data sources (i.e., hospital inpatient facilities, hospital outpatient facilities, and physicians); and (c) that all required diagnosis codes are submitted for each beneficiary and that unique diagnoses are submitted at least once during the risk adjustment data-reporting period.11

To ensure compliance, CMS conducts risk adjustment data validation (RADV) audits to review selected medical records and determine whether they support the diagnoses reported by MA Plans.12 Per CMS, “[v]erifiable medical records documentation is the key to accurate payment and successful data validation,” and “RADV audits are intended to confirm the presence of risk adjustment conditions . . . as reported by MA organizations for their enrollees and confirmed via medical record documentation.”13

MA Plans may only submit claims for risk adjustment payments that meet these requirements.

Scrutiny of the Medicare Advantage Program

GAO and CPI Investigations and Reports

CMS has long understood that the formula for calculating risk adjustment payments may incentivize “MA organizations to potentially over-report diagnoses so that they can increase their payment. . . .”14 Indeed, recent investigative reports from the Government Accountability Office (GAO) – an arm of the U.S. Congress that acts as “fiscal watchdog” and seeks to improve the financial performance of the federal government by investigating and auditing other parts of the federal government – and the non-profit CPI (in conjunction with recent FCA complaints filed by the DOJ), have accused MA Plans of engaging in a pattern of inflating the severity of their patients’ diagnoses in order to receive higher risk adjustment payments.

A 2013 GAO report found that “cumulative [MA] risk scores in 2010 were 4.2 percent higher than they likely would have been if the same beneficiaries had been enrolled” in traditional Medicare, resulting in excess payments to MA Plans of between $3.2 billion and $5.1 billion.”15 More recently, the GAO reviewed CMS’s methodology for conducting RADV audits and determined that “CMS’s methodology does not result in the selection of contracts for audit that have the greatest potential for recovery of improper payments” and that, as a result, CMS improperly paid (by its own estimation) $14.1 billion in 2013 to MA organizations, “primarily because of . . . unsupported diagnoses.”16 This 2016 report also concluded that CMS had, to that point, spent $117 million in conducting the RADV audits, but had only recouped $14 million.17 Moreover, in 2014, an investigation conducted by the non-partisan CPI found that “risk score errors” had led to MA Plans receiving nearly $70 billion in improper payments between 2008 and 2013.18

Prior DOJ Enforcement Pertaining to Medicare Advantage

While both CMS and the Department of Health and Human Services’ Office of Inspector General (OIG)19 have made some headway in recouping overpayments made to MA Plans, the DOJ has played a small role. Prior to its recent FCA lawsuits, the DOJ had only brought a couple actions even related to the MA program.

In November 2010, the Justice Department brought suit20 against South Florida physician Dr. Walter Janke and his wife for an alleged Medicare Advantage fraud scheme in violation of the FCA.21 As noted in the DOJ’s press release, the Jankes were the owners of America’s Health Choice Medical Plans, Inc. (AHC), an MA Plan, as well as Medical Resources LLC (MR), the primary care provider servicing AHC’s Part C beneficiaries.22 According to the DOJ, “the Jankes and MR violated the False Claims Act by causing AHC to falsely increase the severity of beneficiary diagnoses to obtain higher Medicare payments.”23 The Jankes ultimately settled the case for $22.6 million.24

Additionally, in 2015 the DOJ charged a Delray Beach physician, Dr. Isaac Kojo Anakwah Thompson with healthcare fraud for conducting a Medicare Advantage scheme involving Humana.25 According to the grand jury indictment, Dr. Thompson operated two clinics in Delray Beach and Boynton Beach, Florida, both of which served as primary care physicians (PCPs) in Humana’s HMO network.26 This allowed a beneficiary enrolled in the Humana HMO to choose Dr. Thompson as his or her PCP.27 However, per the FBI press release, “Thompson defrauded Medicare by submitting fraudulent diagnoses to Humana for Medicare Advantage beneficiaries.”28 Specifically, Dr. Thompson was accused of diagnosing – between 2006 and 2010 – 387 Medicare Advantage beneficiaries with ankylosing spondylitis, a rare chronic inflammatory disease in the spine.29 Dr. Thompson was sentenced to 46 months imprisonment and ordered to pay $2.1 million in restitution.30

However, despite numerous filings over the years by various FCA qui tam relators (i.e., whistleblowers), the DOJ had, until recently, declined every Medicare Advantage risk-score manipulation case brought by a whistleblower. For example, in August 2013, whistleblower Anita Silingo, a former compliance officer at Santa Ana, California-based MedXM, filed an FCA complaint against the company.31 MedXM contracted with MA Plans to send medical examiners to beneficiaries’ homes for a home assessment in order to obtain data used to calculate the beneficiaries’ risk score.32 According to the complaint (filed, like the UnitedHealth complaints, in the Central District of California), MedXM coders advised MedXM’s independent contractor physicians and nurses “to modify the unlocked [Microsoft Word document] medical record in order to increase the severity of the patients’ diagnosis, in an effort to increase the patients’ HCC [Hierarchical Condition Category] risk scores.”33 The complaint further alleged that the MA Plans “all turned a blind eye to the truth in exchange for receiving HCC risk assessment data that increased their risk scores and thereby increased their capitation revenue form [sic] CMS.”34 Moreover, MedXM’s medical examiners allegedly diagnosed patients without the necessary equipment, and its physicians sometimes made diagnoses without a face-to-face interaction with the patient.35 Yet, despite these allegations, after conducting its own investigation, the DOJ declined to intervene.36

The DOJ’s Complaints Against UnitedHealth

The DOJ’s two Complaints-in-Partial-Intervention allege, for the most part, the same fact pattern against UnitedHealth. Broadly, the Complaints allege that UnitedHealth: (1) knew that many of the diagnosis codes that it submitted to CMS for risk adjustment payments were not supported by the beneficiaries’ medical records; and (2) failed to identify and delete invalid diagnosis codes already submitted to CMS through RAPS after later determining that such codes were invalid.37 The Complaints further allege that, had CMS known of the invalidity of these diagnosis codes, it would have recalculated each beneficiary’s risk score, thereby reconfiguring the risk adjustment payments to UnitedHealth. Thus, the thrust of the DOJ’s FCA actions rests on the theory that UnitedHealth’s false attestations as to the validity of the diagnosis codes submitted through RAPS caused CMS to make risk adjustment payments to UnitedHealth over and above what CMS should have paid.

The Complaints allege that UnitedHealth contracted with a vendor, TCS (The Coding Source), in 2005 to perform retrospective chart reviews of beneficiaries’ medical records for a provider in California. TCS’s retrospective reviews were “blind” – that is, the reviewers had no knowledge of the diagnosis codes submitted by physicians and other healthcare providers to UnitedHealth. Instead, the reviewers were tasked with reviewing the medical records of each beneficiary and making a separate determination as to the appropriate diagnosis code. However, the Complaints allege that “UnitedHealth knowingly and improperly avoided comparing the diagnosis codes previously reported by the provider and submitted to Medicare for payments with the results of the coders’ chart reviews in order to identify those provider-reported codes that were not supported by the beneficiaries’ medical records (which would have resulted in decreased payments from CMS).”38 By failing to make these comparisons and inform CMS of both the positive and negative results of the chart reviews, UnitedHealth allegedly prevented CMS from recovering from UnitedHealth previously-paid risk adjustment payments based on invalid diagnosis codes.

The DOJ further alleges that UnitedHealth’s Risk Adjustment Attestations (which were submitted each year after the final risk adjustment submission deadline but prior to the final reconciliation payment) contained false statements as to the accuracy, completeness, and truthfulness of the diagnosis codes submitted.39 Indeed, the Complaints allege that, beginning in payment year 2008, UnitedHealth “even added to its Attestations a footnote which stated that they were ‘based on facts reasonably available or made available to [UnitedHealth] as of the date[s] of’ the Attestations.”40 Thus, the DOJ alleges that because UnitedHealth had “facts reasonably available” as of the date of the Attestation – namely, the negative results of the chart reviews – its failure to “look both ways” at the results of the chart reviews constituted a false certification for purposes of the Attestation.

In addition to the FCA allegations, the Complaints also assert claims of conspiracy to violate the FCA, a “reverse” FCA claim (i.e., that UnitedHealth failed to return payments that it knew it should not have received), and common-law claims for restitution (unjust enrichment) and payment by mistake.41

Freedom Health Settlement

On May 30, 2017, two weeks after the DOJ filed its Complaint-in-Partial-Intervention in the Poehling case, it issued a press release stating that Tampa, Florida-based Freedom Health, Inc. (Freedom Health) had agreed to a $32.5 million settlement to resolve allegations that it engaged in a fraudulent scheme to maximize Medicare Advantage reimbursements.42 Specifically, the government alleged that Freedom Health submitted (or caused to be submitted) unsupported diagnosis codes to CMS, resulting in inflated reimbursements from 2008-2013.43 Additionally, similar to the UnitedHealth complaints, the government also alleged that “Freedom Health made material misrepresentations to CMS regarding the scope and content of its network providers (physicians, specialists and hospitals) in its application to CMS in 2008. . . .”44 The timing of the settlement is significant, as it marked the third action DOJ took this year pertaining to Medicare Advantage risk-score manipulation.


The Medicare Advantage Program has become a target of government scrutiny over the last several years as federal government investigations continue to conclude that MA Plan risk scores have been inflated by the use of improper diagnosis codes, thereby allegedly causing the government to pay out more than it believes it owes to the Medicare Advantage program. However, until May of this year, the DOJ had yet to intervene in a whistleblower case alleging that such risk scores had been fraudulently inflated. The DOJ’s recent interventions against UnitedHealth in both the Swoben and Poehling cases demonstrate the Department’s newfound willingness to aggressively pursue MA Plans. As such, in addition to remaining vigilant of this increased government scrutiny, MA Plans should make efforts to review their risk score calculations to ensure that all internal audit information is taken into account and that the appropriate adjustments are made.


1 United States’ Complaint-In-Partial-Intervention [hereinafter, the “Swoben Complaint”], United States ex rel. Swoben v. Secure Horizons, No. CV-09-5013 (C.D. Cal. May 1, 2017); United States’ Complaint-In-Partial-Intervention [hereafter, the “Poehling Complaint”], United States ex rel. Poehling v. UnitedHealth Group, Inc., et al., No. CV-16-08697 (C.D. Cal. May 16, 2017).

2 Although the DOJ reached a roughly $23 million settlement in 2010 in an FCA settlement with a Florida-based company involving Medicare Advantage, no whistleblower was involved in that case. See Jeff Overley, “DOJ Hits UnitedHealth with Milestone FCA Suit,” Law360 (May 2, 2017), (last visited May 9, 2017).

3 42 U.S.C. § 1395w-21; 42 C.F.R. § 422.1 et seq.; see also, “How do Medicare Advantage Plans work?” (last visited June 27, 2017).

4 See “Medicare Advantage lobbying machine steamrolls Congress,” Center for Public Integrity (June 10, 2014),

5 42 U.S.C. § 1395w-23; 42 C.F.R. § 422.308.

6 See 42 U.S.C. § 1395w-23(a)(1)(C)(i), (a)(3); 42 C.F.R. § 422.308(c)(2).

7 See Policy and Technical Change to the Medicare Advantage and the Medicare Prescription Drug Benefit Programs, 74 Fed. Reg. 4588, 4657 (Jan. 28, 2005).

8 See id.

9 42 C.F.R. § 422.504(l)(2).

10 Id. (“As a condition for receiving a monthly payment under subpart G of this part, the [Medicare Advantage] organization agrees that its chief executive officer (CEO), chief financial officer (CFO), or an individual delegated the authority to sign on behalf of one of these officers, and who reports directly to such officer, must request payment under the contract on a document that certifies (based on best knowledge, information, and belief) the accuracy, completeness, and truthfulness of relevant data that CMS requests. Such data include specified enrollment information, encounter data and other information that CMS may specify.”).

11 Ctrs. for Medicare & Medicaid Servs., CMS Pub. 100-16, Medicare Managed Care Manual, Ch. 7, § 40 (Sep. 19, 2014), available at (last visited June 27, 2017).

12 See Contract Year 2015 Policy and Technical Changes to the Medicare Advantage and the Medicare Prescription Drug Benefit Programs, 79 Fed. Reg. 1918, 2001 (Jan. 10, 2014).

13 Id.

14 Id.

15 Government Accountability Office, “Medicare Advantage: Substantial Excess Payments Underscore Need for CMS to Improve Accuracy of Risk Score Adjustments,” GAO-13-206 (Jan. 2013), available at

16 Government Accountability Office, “Medicare Advantage: Fundamental Improvements Needed in CMS’s Effort to Recover Substantial Amounts of Improper Payments,” GAO-16-76 (Apr. 2016), available at

17 Id.

18 Center for Public Integrity, “Why Medicare Advantage costs taxpayers billions more than it should,” (June 4, 2014),

19 OIG conducted risk adjustment data audits as early as 2007 and, by 2015, had targeted improper MA payments as part of its 2015 Work Plan. See Office of Inspector General, U.S. Dept. of Health & Human Servs., “Work Plan: Fiscal Year 2015,” (last visited June 27, 2017) (“We will review the medical record documentation to ensure that it supports the diagnoses MA organizations submitted to CMS for use in CMS’s risk-score calculations and determine whether the diagnoses submitted complied with Federal requirements.”).


20 Notably, this was not a whistleblower case.

21 See Dept. of Justice, “Florida-based Medicare Advantage Plan Owners & Primary Care Provider Agree to Pay $22.6 Million to Settle Claims of Falsifying Diagnoses,” Press Release, (Nov. 24, 2010).

22 Id.

23 Id.

24 Id.

25 Federal Bureau of Investigation, “Delray Beach Doctor Charged with Health Care Fraud,” Press Release (Feb. 4, 2015),

26 Id.

27 Id.

28 Id.

29 Department of Justice, “Doctor Who Falsely Diagnosed Hundreds of Patients As Part of a Medicare Fraud Scheme Sentenced to Prison,” Press Release (July 6, 2016),

30 Id.

31 Silingo Complaint, United States ex rel. Silingo v. Mobile Med. Examination Servs., Inc., No. 8:13-cv-01348 (C.D. Cal. Aug. 30, 2013).

32 Id.

33 Id. at ¶ 18.

34 Id. at ¶ 40.

35 Id.

36 Notice of Election by the United States of America to Decline Intervention, United States ex rel. Silingo v. Mobile Med. Examination Servs., Inc., No. 8:13-cv-01348 (C.D. Cal. Aug. 30, 2013).

37 See Swoben Complaint, supra note 1; see also, Poehling Complaint, supra note 1.

38 Swoben Complaint at ¶ 90.

39 Id. at ¶ 108.

40 Id.

41 Id. at ¶ ¶ 109-131.

42 Department of Justice, “Medicare Advantage Organization and Former Chief Operating Officer to Pay $32.5 Million to Settle False Claims Act Allegations,” Press Release (May 30, 2017),

43 Id.

44 Id.

Samuel M. Shapiro

Arnall Golden Gregory LLP, Washington, DC

Samuel Shapiro is an associate in the Washington, D.C. office of Arnall Golden Gregory LLP.  Mr. Shapiro focuses his practice on representing healthcare providers in litigation, government investigations, and regulatory matters, with a specific focus on False Claims Act defense.  He may be reached at [email protected].