U.S. ex rel. Swoben v. United Healthcare Ins. Co. — Aug. 2016 (Summary)

QUI TAM

U.S. ex rel. Swoben v. United Healthcare Ins. Co.
No. 13-56746 (9th Cir. Aug. 10, 2016)

The United States Court of Appeals for the Ninth Circuit vacated a district court’s judgment that dismissed a qui tam relator’s complaint, which alleged that certain Medicare Advantage organizations submitted false certifications in violation of the False Claims Act.

The relator claimed that the defendant organizations submitted false certifications by performing biased retrospective medical record reviews designed to not identify erroneously reported diagnosis codes, which the district court dismissed, concluding that relator failed to allege a False Claims Act claim with particularity.

The relator appealed, and the defendant organizations argued that during the relevant time period, there was no authority which indicated that a Medicare Advantage plan was obliged to undertake affirmative steps to uncover potentially unsupported codes before it could certify the third-party risk adjustments based on its best knowledge, information, and belief.

The appeals court held that in light of CMS guidance, Medicare Advantage organizations have always had an obligation to take steps to ensure the accuracy, completeness, and truthfulness of the encounter data submitted.  When Medicare Advantage organizations design retrospective reviews of enrollees’ medical records deliberately to avoid identifying erroneously submitted diagnosis codes that might otherwise have been identified with reasonable diligence, those organizations can no longer certify based on the standard set forth by CMS.  The appeals court further noted that this is especially the case when, as the relator alleged, an organization was on notice that its data included a significant number of erroneously reported diagnosis codes.

Additionally, the appeals court noted that blind coding is not consistent with the good faith requirement when it is used to avoid or conceal over-reporting errors: if Medicare Advantage organizations perform audits, identify both under-reporting and over-reporting, but withhold information about the over-reporting, the result is a false certification.  Therefore, the relator’s allegations were a cognizable legal theory and, consequently, the appeals court vacated the district court’s judgment.