The False Claims Act is the government’s weapon of choice in fighting healthcare fraud.   In the beginning of the Obama Administration, Congress amended the False Claims Act and enacted a wish list from DOJ prosecutors.

Healthcare companies have no choice but to negotiate settlements since they risk exclusion from federal healthcare programs, the equivalent of a death sentence for healthcare businesses.

United Healthcare is one of the largest healthcare insurance companies. Recently, the government announced that it intervened in two separate False Claims Act cases against United Healthcare. Each of the cases demonstrates the significant risks and compliance challenges for companies in the healthcare sector.

In the first case, the government intervened against United Healthcare in California based on United’s reliance on untruthful and inaccurate information about the health status of beneficiaries enrolled in United’s Medicare Advantage Plan in California. United is the largest Medicare Advantage Organization and provides healthcare and prescription drug benefits to Medicare beneficiaries. United receives a payment under Medicare based on the health status of each beneficiary.

United ignored information about the health status of the beneficiary in order to increase its monthly payments from Medicare. United conducted detailed chart reviews to confirm the health status of beneficiaries but ignored information demonstrating invalid diagnoses and situations where United was required to repay funds received to Medicare.

Two weeks later, the government announced its intervention in a second False Claims Act case against United. The allegations are similar to those raised in the first case but involve alleged fraud committed by United in its national Medicare Advantage program.

In particular, the government alleges that United conducted national chart reviews to identify additional diagnoses not reported by treating physician to increase United’s risk adjustment payments. However, like the California case, United ignored information from these chart reviews indicating that hundreds of thousands of diagnoses were invalid and did not support prior claims.

The government’s complaint also alleges that United ignored information about invalid diagnoses from providers with financial incentives to furnish such diagnoses. Specifically, these providers were compensated based on the amount of money United received from Medicare. United was allegedly aware that these compensation arrangements created strong incentives for providers to submit invalid diagnoses. United’s own audits of the charts confirmed that these providers were reporting invalid diagnoses.

Given the number of claims involved in this case and the burden of proving each and every fraudulent submission, the United case may provide the government with another opportunity to advance a sampling technique to calculate the amount of false billing claims.  In a number of recent cases, the government has been arguing to permit extrapolation of samples to the entire population of alleged false claims.   The government has had some success in convincing judges to allow such an analysis. Courts have been willing to allow sampling claims analysis in recognition of the large volume of claims and the burdensome, if not impossible, requirement to prove each and every false claim.

Healthcare providers devote extensive time to maintaining accurate patient charts, auditing the charts and making sure that charts support any submitted claims. United has the resources to undertake significant auditing and monitoring programs to ensure accurate charts, but they appear to have devoted inadequate attention to the incentives and procedures for carrying out such chart reviews.  The united case is an important reminder to all healthcare providers on the importance of accurate charting of medical procedures.