A Florida health insurance company and its former chief operating officer will pay $32.5 million to settle a whistleblower lawsuit. The allegations were that the insurer defrauded the federal government for years by overbilling and falsifying claims to make its members appear sicker than they actually were, with the purpose of extracting bigger payments from Medicare.
In a federal lawsuit, the Justice Department said that Freedom Health, a Tampa-based HMO (Health Maintenance Organization) manipulated diagnosis codes from 2008 to 2013 to inflate reimbursements for members of the company’s Medicare Advantage plans in Florida, reports the Miami Herald.
Some Members Treated for Non-Existent Conditions
The higher reimbursements are known as “risk adjustment,” and are meant to offset the higher cost of treating sicker patients. But the federal complaint, brought forward by Freedom’s former chief medical officer, Dr. Darren D. Sewell, said that the members either were treated for conditions they did not have or they never received the alleged additional care.
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According to federal estimates in April 2017, Freedom Health and its affiliate, Optimum Healthcare, covered more than 123,000 Floridians in 25 counties (including Miami-Dade, Broward, and Palm Beach), through its Medicare Advantage plans.
Application to Expand Using Allegedly Fraudulent Information
Freedom Health was also accused by the Justice Department of lying to federal regulators regarding the size and makeup of its network of doctors, hospitals, and other healthcare providers in a 2008 application to expand into new counties in Florida as well as other states, according to the Miami Herald.
Freedom submitted to the Centers for Medicare and Medicaid Services a directory of hospitals, doctors, and specialists that were supposedly in its network, but who never agreed to provide care for Freedom’s members, thereby creating a false illusion, according to an attorney for the whistleblower, Dr. Sewell, who worked for Freedom from 2007 to 2012.
Doctors were not able to refer Freedom member to specialists, according to the lawsuit, and one Central Florida patient cited in the complaint had to travel hundreds of miles for a mammogram and a bone density test.
Freedom’s former chief operating officer, agreed to pay $750,000 to settle his alleged role in the scheme to expand into new counties and states without an adequate provider network.
Whistleblower’s Entitlement to Share of Settlement
Dr. Sewell filed the whistleblower lawsuit in 2009. Sewell’s allegations led to an undercover FBI investigation. He died in September 2014, but his estate is entitled to a share of the $32.5 million settlement. The share is estimated at about $4.8 million to $8.1 million.
The company will pay $31.7 million to settle the two fraud allegations: $16.7 million for the risk adjustment claims and $15 million for the provider network charge. It was remarked that in recent years, as evidence has grown that many Medicare Advantage plans routinely overbill the government, the Justice Department has heightened prosecution of risk adjustment fraud. The federal government joined two lawsuits against United Health Group in March, alleging a similar type of risk adjustment fraud in that insurer’s Medicare Advantage plans, according to the Miami Herald.
Popularity of Medicare Advantage
Medicare Advantage has increased in popularity for older Americans, who qualify at age 65. The plans cover almost 18 million people – nearly one-third of all Medicare beneficiaries. This is big business in South Florida where, according to federal estimates, 61 percent of enrollees or more than 460,000 people are signed up for Medicare Advantage in Miami-Dade and Broward counties.
Even though Freedom Health admitted no wrongdoing in the settlement, they will enter into a corporate integrity agreement with the Department of Health and Human Services detailing steps the insurer will take to comply with federal law. This will include the establishment of a compliance committee, written standards, and independent reviews.
Chad A. Readler, acting Assistant Attorney General stated that he hoped that the healthcare fraud whistleblower lawsuit settlement would serve to discourage others from engaging in fraud. “Today’s results in the 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,” Readler said in a statement.
Legal Information Regarding Medical Insurance Fraud
If you or someone you know has been affected by medical negligence or insurance fraud, you may be eligible for valuable compensation. The personal injury attorneys at Parker Waichman LLP offer free, no-obligation case evaluations. We urge you to contact us at 1-800-YOURLAWYER (1-800-968-7529).