A former SCAN Health Plan employee's allegations of Medicare Advantage fraud against several insurers and HMOs were deemed too vague by federal judge.
The Central District of California dismissed the False Claims Act allegations against Aetna, WellPoint, UnitedHealth, Health Net and HealthCare Partners, a contracted medical group, ruling that the would-be whistleblower's arguments failed several legal standards.
In 2009, James Swoben, a former SCAN data manager, accused the California-based SCAN Health Plan and the other insurers of manipulating Medicare Advantage patients' risk scores in a type of auditing fraud to secure inflated payments.
In the mid- and late-2000s, after the Centers for Medicare & Medicaid Services began adjusting monthly Medicare Advantage payments based on a risk-scoring system, Swoben alleged that the insurers and medical group were retrospectively reviewing Medicare Advantage patients' charts and failing to report diagnosis codes previously submitted to Medicare but not documented in medical charts.
Instead, Swoben alleged, HealthCare Partners, a network caring for 575,000 managed care patients in California, only submitted new diagnoses not previously reported to Medicare -- yielding artificially high risk scores for the patients and inflated capitated payments to the HMOs.
Swoben also alleged that the insurers knew HealthCare Partners' retrospective reviews lacked any mechanisms to discover previously-submitted diagnosis codes, and that an independent coding company hired by UnitedHealth to review especially sick patients ended up concealing previously-reported diagnosis codes and yielding higher capitated payments.
Swoben, California and federal prosecutors actually settled his allegations against SCAN Health Plan last summer for $3 million, as part of a complex $323 million overpayment settlement for Medicare and Medicaid claims going back to 1985.
But the allegations against the rest of the insurers -- which could have yielded the federal government several million dollars and Swoben up to 25 percent of that as a whistleblower -- were dismissed by federal judge John Walter.
Successful False Claims Act allegations must demonstrate false statements, fraudulent conduct, and fraudulent intent -- none of which were shown in Swoben's complaints, Walter said.
And while Swoben would not be required to provide "representative examples" of a false claim to support every allegation, Walter wrote, "he must at least allege 'particular details of a scheme to submit false claims paired with reliable indicia that lead to a strong inference that claims were actually submitted.'"
After several iterations of his complaint, Swoben was "still unable to allege the actual false representations, the makers of the false statements, and facts," Walter wrote -- as opposed to what were mostly speculations "that plausibly demonstrate the federal government was actually overcharged."
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