UnitedHealth defeats federal Medicare Advantage suit

A federal judge in California struck down a U.S. Department of Justice lawsuit claiming that UnitedHealth Group and affiliated health plans scored millions of dollars in inflated Medicare Advantage payments by making patients seem sicker than they actually were.

U.S. District Judge John Walter in California ruled late Thursday that the Justice Department's False Claims Act allegations against UnitedHealth and its affiliates were too vague to move forward. Although the agency alleged UnitedHealth, the nation's largest Medicare Advantage insurer, inflated plan members' risk scores since at least 2005, Judge Walter said the DOJ hadn't claimed that anyone specifically knew about the alleged upcoding.

"The (DOJ's complaint) is a classic 'shotgun pleading' that wholly fails to state clearly how each and every defendant is alleged to have violated plaintiffs' legal rights," the judge wrote in his opinion.

That sets "a pretty high bar" for DOJ's suit, but it's not insurmountable, according to William Horton, a partner at the law firm Jones Walker.

"DOJ seems to have a pretty active focus on bringing False Claims Act cases in the Medicare Advantage setting, and I don't think it's likely that they will abandon that just yet," he said.

UnitedHealth declined to comment on the case. The DOJ did not respond to a request for comment.

Medicare Advantage plans are paid a flat per-beneficiary fee from the CMS for covering individuals. The agency adjusts payments to take into account sicker members by using risk scores. There have been several whistle-blower lawsuits in recent years alleging health plans inflate members' risk scores to secure higher payments.

The Justice Department has opened several investigations into medical upcoding in the Medicare Advantage program. UnitedHealth, Aetna, Health Net, Humana and Cigna's Bravo Health are all under federal scrutiny for potential upcoding issues.

"The district court's decision obviously is a significant setback for DOJ," said Matt Curley, a partner at the law firm Bass Berry & Sims in Nashville.

The DOJ will have an opportunity to beef up some of the lawsuit's allegations, but the suit will be limited to actions after May 1, 2007, due to the False Claims Act's statute of limitations. Judge Walter also dinged the feds for failing to allege that the CMS wouldn't have paid UnitedHealth an enhanced Medicare Advantage rate without the alleged upcoding.

"The judge's order is pretty clear about what it would take to amend the complaint in a way that would pass muster, and if DOJ can assemble the relevant details, an amendment would not seem difficult," Horton said.

A whistle-blower first sued UnitedHealth over the inflated Medicare Advantage payments in 2009. The DOJ didn't intervene in the suit until May 2017. It joined another, similar suit against the insurer in February 2017.