United sues to recover $43M lost to alleged fraud

UnitedHealth Group, Inc. filed a lawsuit against companies that reportedly duped the insurance giant into overpaying more than $40 million for weight loss surgery and related pre-surgical care, the Los Angeles Times reported. United's lawsuit alleges that Michael and Julian Omidi, brothers behind a multi-media ad campaign for lap-band surgery in California, ran a network of companies that billed for services that were unnecessary, ineligible for payment or never performed.

Their ads contained the slogan, "Let your new life begin, call 1-800-GET-THIN." In this case, getting thin meant having lap-band surgery to shrink the stomach. Patients who undergo this procedure may eat less afterward and lose weight, WebMD explained. But lap-band surgery qualifies for payment only for the morbidly obese who fail to shed pounds through gentler means, according to a LA Times column by Michael Hiltzik.

United says it denied many of the defendants' preauthorization requests, only to learn later that they concealed subsequent claims for lap-band surgery in bills for other services, Hiltzik noted.

The lawsuit also says some Omidi claims were priced more than 300 percent higher than those of their peers for identical services. But Daron Tooch, a lawyer representing the surgery centers, told the Times that high reported charges aren't unlawful. 

"How much do you pay for popcorn at a movie theater, $6? And how much did they pay for the popcorn in the bag, less than a cent?" Tooch asked. "If they [United] didn't want to pay, they shouldn't have paid it … Now they have to find a reason for why they paid these claims and that's why they're manufacturing these allegations of fraud."                 

United said in its lawsuit that it receives almost 2 million claims per day requiring processing within mandated time frames. "By practical necessity, United must reasonably and in good faith rely on the veracity of the descriptions of the services rendered as stated on the claims form and the amount of the bill submitted by the provider for each service."

But that argument was unconvincing to Hiltzik. "Is it plausible that a leading health insurance company--if it were on its game--would allow $43 million to go out the door with realizing that it was being systematically cheated?" he asked. "Or is it more likely that United took the easy way out--not scrutinizing the medical claims until too late?"

For more:
- read the Times article
- see the WebMD article on lap-band surgery
- here's Hiltzik's column