U.S. can sue UnitedHealth in $1 billion Medicare case, judge rules

(Reuters) - A federal judge has ruled the U.S. Justice Department can move forward with a lawsuit claiming UnitedHealth Group Inc wrongly retained more than $1 billion from the government healthcare program Medicare.

U.S. District Judge Michael Fitzgerald in Los Angeles on Monday ruled that the department had sufficiently alleged UnitedHealth submitted invalid diagnostic data related to the health status of patients enrolled in Medicare Advantage plans.

But Fitzgerald dismissed claims that the insurer falsely attested to the data’s validity, saying the key allegation that those assurances affected payment decisions by the U.S. Centers for Medicare and Medicaid Services was “missing.”

Fitzgerald said that while the data itself appeared to be material to the agency’s payment decisions, the allegations regarding the assurances UnitedHealth made about the data “do not suggest they are likely to influence the payment of money.”

UnitedHealth in a statement on Tuesday said it rejects the Justice Department’s remaining claims and will continue contesting them. The Justice Department had no immediate comment.

Fitzgerald’s decision to dismiss part of the case was based on a 2016 U.S. Supreme Court decision regarding what must be alleged under the False Claims Act to prove a company’s false statement was material to the government paying it.

That law allows the government and whistleblowers suing on its behalf to recover taxpayer money paid to companies based on fraudulent claims.

If successful, whistleblowers receive a percentage of the recovery. The government may intervene in whistleblower lawsuits, typically a major boost to those cases.

Last year, the Justice Department intervened in a lawsuit brought by former UnitedHealth executive Benjamin Poehling, whose whistleblower case was filed under seal in 2011.

The Justice Department said UnitedHealth obtained inflated risk adjustment payments based on untruthful and inaccurate information about the health of patients enrolled in Medicare Advantage plans.

More than one-third of Medicare recipients are in Advantage plans run by private insurers like UnitedHealth.

The lawsuit said UnitedHealth failed to repay the Medicare program by over $1.14 billion from 2011 to 2014.

The case was one of two that the Justice Department announced last year against UnitedHealth related to payments it received for patients enrolled in Medicare Advantage plans.

But a federal judge in October dismissed the other case, saying the government failed to allege CMS would have refused to make payments to UnitedHealth if it had known all the facts.

The case is U.S. ex rel. Poehling v. UnitedHealth Group Inc et al, U.S. District Court, Central District of California, No. 16-cv-08697.

Reporting by Nate Raymond in Boston; Editing by David Gregorio