UnitedHealth Lawsuit Signals a Surge in Medicare Fraud Whistleblower Cases
Nearly $37 million in settlements related to a single diagnostic test – the QuantaFlo – might seem like a contained event. But the recent lawsuit filed against UnitedHealth Group by healthcare fraud whistleblowers, following the Department of Justice’s (DOJ) decision not to intervene, is a harbinger of a significant shift: a growing reliance on qui tam lawsuits to combat Medicare fraud, particularly in the realm of diagnostic testing. This isn’t just about one test; it’s about a potential flood of cases challenging billing practices and the accuracy of medical technologies used to justify payments from the federal healthcare program.
The QuantaFlo Case: A Breakdown
At the heart of the dispute is QuantaFlo, a non-invasive test used to detect peripheral artery disease (PAD). Semler Scientific, the test’s manufacturer, and CR Bard (now owned by BD), its former distributor, agreed to settlements totaling $36.95 million with the DOJ. The allegations centered on claims that the companies misrepresented the test’s capabilities and encouraged providers to bill Medicare for services that didn’t meet established coverage requirements. While the DOJ secured these settlements, the decision not to pursue a case directly against UnitedHealth Group has empowered the whistleblower law firm to take the reins.
This is a crucial distinction. The False Claims Act allows individuals (whistleblowers) to sue on behalf of the government when they believe funds have been fraudulently obtained. If successful, whistleblowers are entitled to a portion of the recovered funds. The DOJ’s declining to intervene doesn’t end the case; it simply allows the whistleblower to continue the litigation independently.
Why the DOJ Passed – and Why It Matters
The DOJ’s rationale for not intervening remains largely undisclosed, but several factors likely played a role. Resource constraints within the DOJ, the complexity of proving intent to defraud, and potentially a strategic decision to focus on larger targets could all be contributing factors. However, this decision doesn’t signify a lack of concern regarding Medicare fraud. Instead, it signals a potential shift in enforcement strategy – one that increasingly relies on the private sector to police fraudulent activity.
As Isaac Bledsoe, acting special agent in charge of the Health and Human Services Department Office of Inspector General, stated, “Medical device companies that misrepresent the capabilities of their products and encourage providers to bill Medicare for services that do not meet coverage requirements drain critical taxpayer-funded resources.” This sentiment underscores the government’s commitment to combating such practices, even if the enforcement pathway is changing.
The Rise of Qui Tam Lawsuits in Healthcare
Expect a significant increase in Medicare fraud qui tam lawsuits. The UnitedHealth case provides a roadmap for whistleblower firms: identify potentially fraudulent billing practices, particularly related to diagnostic tests and new medical technologies, and pursue litigation even without direct DOJ involvement. This is particularly relevant in areas where coverage determinations are ambiguous or evolving.
Several factors are driving this trend:
- Financial Incentives: The potential for substantial financial rewards incentivizes individuals with inside knowledge to come forward.
- Increased Scrutiny of Diagnostic Testing: Diagnostic tests are often a focal point of fraud allegations due to their high volume and potential for upcoding (billing for more expensive tests than were performed).
- Technological Advancements: The rapid pace of medical innovation creates opportunities for misrepresentation and improper billing as new technologies are introduced.
- Data Analytics: Sophisticated data analytics tools are making it easier to identify patterns of potentially fraudulent billing.
Beyond QuantaFlo: Future Targets and Trends
The implications extend far beyond the QuantaFlo test. Areas ripe for increased scrutiny include:
Genetic Testing
The explosive growth of direct-to-consumer genetic testing and the associated billing practices are already attracting attention from regulators and whistleblower attorneys. Questions surrounding medical necessity and appropriate coding are likely to fuel future litigation.
Digital Health Technologies
The proliferation of telehealth, remote patient monitoring, and other digital health technologies presents new challenges for ensuring accurate billing and compliance with Medicare regulations. Demonstrating the clinical value and necessity of these services will be critical.
Artificial Intelligence (AI) in Healthcare
As AI-powered diagnostic tools become more prevalent, questions will arise regarding their accuracy, reliability, and the appropriate level of reimbursement. Transparency and validation of AI algorithms will be essential to avoid potential fraud allegations.
What Healthcare Providers and Companies Need to Do Now
Proactive compliance is no longer optional. Healthcare providers and companies must prioritize robust internal auditing programs, comprehensive coding and billing training, and clear documentation to support all claims submitted to Medicare. Specifically, organizations should:
- Review coding and billing practices for all diagnostic tests and procedures.
- Ensure that all medical necessity documentation is complete and accurate.
- Implement a robust compliance program with regular audits and training.
- Establish a clear process for reporting and investigating potential fraud concerns.
The UnitedHealth lawsuit is a wake-up call. The era of relying solely on the DOJ to police Medicare fraud is waning. A new landscape is emerging, one where qui tam lawsuits play an increasingly prominent role. Organizations that proactively address compliance risks will be best positioned to navigate this evolving environment and protect themselves from costly litigation and reputational damage. What steps will your organization take to prepare for this shift in enforcement?
