Federal judge dismisses Medicare Advantage fraud suit against UnitedHealthcare

justice scales and gavel
A federal judge has dismissed a False Claims Act lawsuit against UnitedHealthcare. (Getty/BrianAJackson)

A federal judge has tossed a False Claims Act lawsuit against UnitedHealthcare, but the ruling left room for the Department of Justice to strengthen its case and potentially refile. 

Judge John F. Walter, of California's Central District, dismissed (PDF) claims filed against UnitedHealth by whistleblower James Swoben in 2009 along with intervening claims by filed by the DOJ earlier this year. The lawsuits alleged that the insurer ignored questionable diagnoses and artificially inflated beneficiary risk scores to boost profits from its Medicare Advantage plans. 

DOJ joined Swoben's case in May. UnitedHealthcare, according to the government's claims, violated the False Claims Act by funding medical chart reviews aimed at boosting risk adjustment payments and ignored reviews that revealed invalid diagnoses designed to avoid paying back overpayments. 

Walter ruled (PDF) that DOJ had failed to prove that the Centers for Medicare and Medicaid Services would not have made the MA payouts to UnitedHealth had the agency been aware of the practices alleged in the suit, or that the claims submitted by the insurer were "knowingly false." The ruling leaves the door open for the DOJ to strengthen its case and address the shortcomings Walter detailed. 

The judge's ruling bars Swoben, who had amended his complaint four times, from refiling claims occurring prior March 13, 2007. Walter's decision noted that the False Claims Act prevents whistleblowers from bringing a claim more than 10 years after the violation occurred. The judge similarly barred the government from filing claims that occurred prior to May 1, 2007.

RELATED: Why the DOJ's Medicare Advantage fraud lawsuits won't likely hurt UnitedHealth's bottom line 

Benjamin Poehling, a second whistleblower who filed a lawsuit against UnitedHealth in 2011 and served as the insurer's finance director, said that the payer had created the "perfect scheme" to game Medicare. The DOJ joined that case in May.

The risk adjustment scheme, Poehling said, was not aimed at improving care for UH members but at boosting the insurer's bottom line. "I came to the point where I couldn't participate in what they were asking me to do anymore," he said. 

Whistleblowers have also alleged that UnitedHealthcare concealed enrollment fraud complaints and other misconduct to boost Medicare Advantage payouts. UH has denied the accusations. 

DOJ has thus far this year cracked down on potential cases of MA fraud. Freedom Health and Optimum HealthCare paid just under $32 million to settle a fraud suit. 

“Today’s result sends a clear message to the managed care industry that the United States will hold managed care plan providers responsible when they fail to provide truthful information,” Acting Assistant Attorney General Chad A. Readler, of the Justice Department’s Civil Division, said following the settlement.