Justice Department Joins Lawsuit Alleging Massive Medicare Fraud By UnitedHealth

By Fred Schulte
Kaiser Health News, March 28, 2017

The Justice Department has joined a California whistleblower’s lawsuit that accuses insurance giant UnitedHealth Group of fraud in its popular Medicare Advantage health plans.

Justice officials filed legal papers to intervene in the suit, first brought by whistleblower James Swoben in 2009, on Friday in federal court in Los Angeles. On Monday, they sought a court order to combine Swoben’s case with that of another whistleblower.

Swoben has accused the insurer of “gaming” the Medicare Advantage payment system by “making patients look sicker than they are,” said his attorney, William K. Hanagami. Hanagami said the combined cases could prove to be among the “larger frauds” ever against Medicare, with damages that he speculates could top $1 billion.

“This is a very big development and sends a strong signal that the Trump administration is very serious when it comes to fighting fraud in the health care arena,” said Patrick Burns, associate director of Taxpayers Against Fraud in Washington, a nonprofit supported by whistleblowers and their lawyers.

“This is not one company engaged in episodic bad behavior, but a lucrative business plan that appears to be national in scope,” Burns said.

When Congress created the current Medicare Advantage program in 2003, it expected to pay higher rates for sicker patients than for people in good health using a formula called a risk score.

But overspending tied to inflated risk scores has repeatedly been cited by government auditors, including the Government Accountability Office. A series of articles published in 2014 by the Center for Public Integrity found that these improper payments have cost taxpayers tens of billions of dollars.


Regular readers know that the private Medicare Advantage plans have been cheating the taxpayers by upcoding the diagnoses of insured patients to make them appear sicker than they really are in order to qualify for extra risk adjustment payments. This update confirms the seriousness of the allegations in that the Justice Department has joined the lawsuit against the insurers. Damages could top a billion dollars.

This is particularly pertinent right now since there is intense political pressure to reduce entitlement spending (Medicare and Social Security) in the forthcoming federal budget negotiations. A plan favored by HHS Secretary Tom Price, House Speaker Paul Ryan, and others in the Republican leadership would convert traditional Medicare into a defined premium (voucher) program, turning all of Medicare over to these crooks.

Although our first priority must continue to be advocacy of a single payer national health program – an improved Medicare for all – it is imperative that we protect the Medicare that we do have if we are going to use an improved version of it to provide health care to all.

Special credit should go to the author of this KHN/NPR article, Fred Schulte, who has done extensive investigative reporting on this topic, having authored the articles on it previously published by the Center for Public Integrity. Thanks, Fred!