UnitedHealth Wins Key Round in Medicare Billing Fraud Case (1)

UnitedHealth Group Inc. moved closer to winning dismissal of a long-running lawsuit in which the US government claims the company overbilled Medicare by at least $2.1 billion.

The Justice Department is “lacking any evidence” to support its claims that the company failed to return money it received through the Medicare Advantage program that serves millions of patients, a legal expert overseeing the collection of evidence in the case said in a recommendation Monday to a federal judge. That judge must now decide whether to adopt the recommendation.

The finding by Suzanne Segal, a retired judge known as a special master, is a significant victory for the company in a case that has spanned more than a decade and centers on diagnosis codes in patient records. Segal rejected a conclusion by a government expert that the overpayments exceeded $2 billion — an amount that could have been tripled under the law.

Shares of UnitedHealth gained as much as 2.6% in New York.

UnitedHealth praised the finding in a statement, saying the special master “concluded there was no evidence to support the DOJ’s claims we were overpaid or that we did anything wrong,” it said.

The Justice Department claims UnitedHealth failed to remove unsupported diagnosis codes from patient records that increased payments from the government for private Medicare Advantage plans. But Segal, in a 50-page report, said the US can’t prevail on a claim that UnitedHealth “knowingly and improperly avoided an obligation to repay the government for an overpayment based on unsupported diagnosis codes” or that the company acted with “requisite intent.”

“The government has not met its burden,” Segal wrote. “A failure to present evidence on this essential element is fatal to the government’s claims.”

A Justice Department spokesperson declined to comment.

Whistleblowers initially filed the claims in sealed lawsuits, and the Justice Department later took up the case. The False Claims Act allows whistleblowers to sue companies on behalf of the government and share in any recovery.

The case is US v. UnitedHealth Group Inc., 16-cv-08697, US District Court, Central District of California.

(Updates with company statement in fifth paragraph and further details of finding.)

To contact the reporters on this story:
David Voreacos in New York at dvoreacos@bloomberg.net;
John Tozzi in New York at jtozzi2@bloomberg.net

To contact the editors responsible for this story:
Cynthia Koons at ckoons@bloomberg.net

Peter Jeffrey

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