SDNY Files Civil Fraud Lawsuit Against Anthem

DOJ News

SDNY Files Civil Fraud Lawsuit Against Anthem

On March 27, 2020, the Manhattan U.S Attorney announced the filing of a civil fraud lawsuit against Anthem Inc. for allegedly falsely certifying the accuracy of diagnosis data submitted by the Medicare Advantage Organization to CMS. In exchange for providing coverage to Medicare beneficiaries, MAOs like Anthem receive capitated payments from CMS. The amount of capitated payments an MAO receives is based on a “risk score” calculated using diagnosis data for the beneficiary.

The Complaint alleges that Anthem knowingly failed to delete inaccurate diagnosis codes that were unsupported by the beneficiary’s medical records and certified the accuracy of inaccurate and inflated diagnosis information, which in turn resulted in the overpayment of millions of dollars in Medicare funds to Anthem.

The USAO press release is here.

Mental Health Providers Settle FCA Claims

Progressions Behavioral Health Services, Inc. and a mental health therapist formerly employed by Progressions settled a qui tam lawsuit filed in the Eastern District of Pennsylvania for $27,500. A whistleblower alleged that between May 3, 2017 and October 19, 2018, the therapist fabricated mental health treatment records for over 59 outpatient sessions with a minor.  The therapist allegedly forged the signature of the minor’s parent on records for sessions that never occurred, causing Progressions to submit false claims for payment to Medicaid.

The USAO press release is here.
 

Litigation Updates

DC Circuit Holds Award of E-Discovery Costs in FCA Case Improper

On March 27, 2020, a three-judge panel of the United States Court of Appeals for the District of Columbia Circuit issued a decision considering whether discovery costs were properly awarded against the whistleblower in a qui tam lawsuit. After the district court granted summary judgment to defendants, the whistleblower’s former employer, Kellogg Brown & Root, Inc. sought and received over $100,000 in costs, including costs related to e-discovery hosting and processing, which it contended were recoverable because it incurred the e-discovery costs in the course of copying and converting data to production format.

The whistleblower challenged over $70,000, arguing that the expenses were outside the scope of taxable costs. In a unanimous opinion, the DC Circuit sided with the whistleblower, holding that KBR’s “expansive” reading of 28 U.S.C. § 1920(4) was “capacious" and unsupported, and reduced the amount awarded.

The DC Circuit’s Opinion is here.

Our Analysis

Department of Justice Directed to Prioritize Investigation and Prosecution of COVID-19-Related Fraud

On March 16, 2020, United States Attorney General William Barr issued a memo directing all U.S. Attorneys to prioritize the detection, investigation, and prosecution of COVID-19-related fraud, amid reports of scams, malware, and other fraudulent efforts designed to capitalize on the pandemic.  The DOJ announced the filing of its first enforcement action against COVID-19 fraud only days later.

The Attorney General’s memo directs all United States Attorneys of each state and federal territory to “prioritize the detection, investigation, and prosecution of all criminal conduct related to the [COVID-19] pandemic.”  The memo details that the DOJ has received reports of individuals and entities engaging in fraud aimed to capitalize particularly on the COVID-19 pandemic.

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