DOJ joins whistleblower’s risk-adjustment fraud case against Medicare Advantage plan

BUFFALO, NY, Sept. 15, 2021 – The US Department of Justice has joined a Medicare Advantage fraud whistleblower lawsuit against Independent Health Association, Independent Health Corp., DxID LLC and the former CEO of DxID, that was filed by Phillips & Cohen LLP.

The “qui tam” lawsuit and DOJ allege that Independent Health, its subsidiary DxID, and DxID’s ex-CEO Betsy Gaffney violated the False Claims Act by engaging in risk-adjustment fraud – submitting or causing the submission of false or fraudulent diagnosis codes of enrollees in Medicare Advantage plans – to inflate Independent Health’s risk-adjustment payments.

DOJ filed on Sept. 13 its 102-page complaint in intervention against Independent Health and the other defendants that alleges Medicare Advantage fraud.

“DOJ’s intervention in this case demonstrates the government’s continuing commitment to prosecute risk-adjustment fraud aggressively,” said Emily Stabile, a whistleblower attorney with Phillips & Cohen.

The whistleblower, Teresa Ross, was a director of risk-adjustment services for Group Health Cooperative (GHC), now known as Kaiser Foundation Health Plan of Washington. Her qui tam lawsuit included GHC as a defendant as well as the other defendants. Kaiser Foundation Health Plan paid $6.3 million to the federal government last year to settle its liability in the case.

The whistleblower’s and government’s complaints allege that DxID, a fully owned subsidiary of Independent Health, conducted a retrospective chart review program for GHC and Independent Health to review Medicare Advantage plan patients’ medical records and gather additional diagnosis codes for enrollees that they could submit for risk adjustment even when there was insufficient support in medical records for documenting the codes. False diagnosis codes would increase capitated risk-adjustment payments to the plans.

The government also alleged that the coding consultant “nudged” providers to fill out addenda to retroactively add diagnoses to medical records so that Independent Health could submit additional, fraudulent diagnosis codes. As a result of this process, Independent Health submitted more than 125,000 diagnosis codes that caused the government to pay millions of dollars more to the Medicare Advantage plan than it otherwise would have paid, according to DOJ’s complaint.

Phillips & Cohen is litigating the whistleblower’s risk-adjustment fraud case with co-counsel at Constantine Cannon as well as the government.

Learn more about Medicare Advantage fraud and risk-adjustment fraud.


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