Chilivis Grubman attorneys have discussed the federal False Claims Act (“FCA”) extensively.  The FCA prohibits any person from knowingly presenting, or causing to be presented, a false or fraudulent claim for payment to the federal government.  The FCA also prohibits any person from knowingly making, using, or causing to be made or used, a false record or statement material to a false or fraudulent claim.  Under the qui tam provisions of the FCA, whistleblowers (also known as relators) may receive 15% to 30% of any recovery for cases brought on behalf of the government.  The FCA also allows the government to take over, or intervene, in qui tam cases.  Such intervention occurred recently, according to a U.S. Department of Justice press release

On September 14, 2021, the DOJ announced that it intervened and sued Independent Health Association and Independent Health Corporation (“Independent Health”), DxID LLC (“DxID”), and the former CEO of DxID, Betsy Gaffney.  According to James P. Kennedy Jr., U.S. Attorney for the Western District of New York, “[t]he defendants are alleged to have submitted unsupported diagnosis codes to inflate reimbursements, which enabled them to receive payments from Medicare that were greater than they were entitled.”

The alleged actions took advantage of Medicare Part C’s payment structure.  Under Medicare Part C, private Medicare Advantage Organizations own and operate Medicare Advantage plans in which eligible beneficiaries may enroll.  The Centers for Medicare and Medicaid Services (“CMS”) oversees the Medicare program and issues risk-adjusted payments to the Medicare Advantage Plans based on demographics and the health status of beneficiaries, which establishes “risk scores.”  Generally, severe diagnoses equate to higher risk scores that result in CMS issuing a higher risk-adjusted payment to the Medicare Advantage Plan.  

According to the press release, the defendants are related parties.  DxID is a subsidiary of Independent Health and provides retrospective chart review and addenda services to Independent Health’s Medicare Advantage Plans and other Medicare Advantage Plans.  DxID operated on a contingency fee based on any added recovery that Medicare Advantage Plans received because of its work.  The government alleges that the contingency fee could be as high as 20%.  

According to the government, DxID coded conditions not originally documented in the patient’s chart during the encounter.  DxID also asked healthcare providers to sign addenda forms up to a year after the encounter, according to the press release.  The addenda forms were allegedly used to support adding diagnoses to the records not originally present in the patient’s chart.  These diagnoses resulted in inflated risk scores that increased the payments to Independent Health.  The government also alleges that Independent Health learned of the unsupported diagnosis codes supplied by DxID but did not take adequate corrective actions, such as identifying and deleting the unsupported codes. 

Interestingly, the government initially declined to intervene and informed the court of its decision.  The government later changed course and moved to intervene for good cause, which the court granted.  According to the press release, “[t]he United States’ intervention in this matter illustrates the government’s emphasis on combating health care fraud.  One of the most powerful tools in this effort is the False Claims Act.”

The attorneys at Chilivis Grubman represent clients of all types and sizes in connection with False Claims Act investigations and qui tam litigation.  If you need assistance with such a matter, please contact us today.