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Managed Care: 3 Successful Fraud Cases and Awards

Unfortunately, Medicare, Medicaid, and other government healthcare programs are impacted by fraud. However, we’ve seen a number of successful managed care fraud cases resulting in settlements and whistleblower rewards over the last few years.

In managed care, federal and state governments contract private insurers, also known as Managed Care Organizations (MCO), to provide health insurance benefits to government beneficiaries. The plans are paid a capitated, or per-person, amount to provide benefits to beneficiaries who enroll in one of their plans. Payments to plans are based on demographic information and the health status of each plan beneficiary. In general, plans receive larger payments for beneficiaries with more severe diagnoses. This is typically when fraud occurs. MCOs involved in managed care fraud will often game the reimbursement system and retain more than their fair share of government funds by falsifying patient records and miscoding patient diagnoses.

Managed care fraud takes money away from legitimate government healthcare programs and is a contributing factor to the rising healthcare costs in the United States. Let’s take a look at three managed care fraud cases and how whistleblowers play an integral role in exposing fraud in the industry.

Sutter Health and Affiliates to Pay $90 Million to Settle False Claims Act Allegations of Mischarging the Medicare Advantage Program

In August of 2021, the government announced a $90 million False Claims Act settlement with California-based health care services provider Sutter Health. The settlement resolves allegations that Sutter knowingly submitted inaccurate diagnosis codes for beneficiaries enrolled in Medicare Advantage Plans.

The whistleblower lawsuit was filed against Sutter Health and its affiliates in 2015 by Sutter employee Kathleen Ormsby and alleged that the company had massively overbilled the Medicare Advantage program over a period of approximately six years. As the original whistleblower, Ormsby may receive 15 to 30 percent of the settlement.

CareCore Admits to Improperly Authorizing Over 200,000 Procedures Paid For With Medicare and Medicaid Funds

In May of 2017, CareCore National, LLC agreed to pay $54 million to settle a whistleblower lawsuit alleging the benefits management company authorized medical diagnostic procedures for Medicare and Medicaid patients without properly assessing whether the procedures were in fact necessary or reasonable. According to the DOJ, CareCore authorized over 200,000 diagnostic procedures between 2005 and 2013 which had not been properly reviewed and were unnecessary or inappropriate.

The whistleblower who filed the qui tam lawsuit against CareCore had been employed as a clinical reviewer, but had been instructed to fraudulently approve diagnostic test requests without proper review.

Freedom Health Agreed to Pay $32.5 Million to Settle False Claims Act Allegations

In May of 2017, Florida-based provider of managed care services Freedom Health, agreed to pay $32.5 million to resolve a whistleblower lawsuit alleging they violated the False Claims Act by engaging in illegal schemes to maximize their payment from the government in connection with their Medicare Advantage plans. According to the government, Freedom Health submitted or caused others to submit unsupported diagnosis codes to The Centers for Medicare & Medicaid Services (CMS), which resulted in inflated reimbursements from 2008 to 2013.

Shining a Light on Managed Care Fraud

These cases are a prime example of the seriousness of managed care fraud and how powerful whistleblowers are in enacting change and demanding justice.

Our goal at DJO is to expose managed care fraud wherever and whenever possible. We work with individuals to gain information, build a case, and fight for taxpayers’ justice. In doing so, we can protect the vulnerable and make the world a safer place.

If you suspect fraud in your organization, please contact us. DJO is comprised of a highly experienced team of whistleblower experts, lawyers, and even former whistleblowers, who strive to deliver the highest monetary reward for brave individuals who have valuable information that can expose fraud. If a whistleblower’s lawsuit is successful, the reward can be up to 25% of the funds recovered. The False Claims Act also offers whistleblowers protection against job retaliation or wrongful termination.

Do you have valuable information that can help bring fraud to light? Speak to our experts today.