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US Justice Department Intervenes in Whistleblower Suits Against Kaiser Permanente Alleging Extensive Fraud in Its Multi-Billion-Dollar Medicare Advantage Business

Posted  July 30, 2021
Constantine Cannon represents a highly placed physician and healthcare coding expert in a group of 10 whistleblowers who accuse Kaiser Permanente of defrauding the United States government since at least 2004

Constantine Cannon LLP announced today that the U.S. Department of Justice has joined a portion of its whistleblower lawsuit against Kaiser Permanente, one of the largest managed-care organizations in the country. Kaiser Permanente and various regional affiliates are accused of knowingly submitting false claims for risk-adjusted payments to the Centers for Medicare & Medicaid Services (CMS), as well as failing to return overpayments, resulting in enormous losses to the Medicare Advantage program.

CMS risk-adjusted payments for members with certain conditions under Medicare Advantage (also known as Medicare “Part C”) average roughly $3,000 per year per condition. The suit alleges that Kaiser routinely obtained fraudulently inflated risk-adjusted payments by knowingly submitting diagnosis codes for patients that were unsupported by the patients’ medical records.  The government’s intervention focuses on unsupported diagnosis codes that Kaiser allegedly improperly added through addenda to patients’ medical records.

The unsealed whistleblower complaint also alleges numerous additional examples of fraudulent conduct by Kaiser, including that Kaiser obtained false risk-adjustment payments by using datamining to make patient diagnoses seem more numerous or more severe (a practice referred to as “upcoding”), pressuring physicians to improperly code diagnoses, ignoring internal audit results, and using chart reviews of external providers to add new diagnoses but not delete unsupported ones. Similar one-way chart reviews are at the core of the United States’ massive lawsuit against UnitedHealth Group (UHG), in which Constantine Cannon represents the whistleblower.

The qui tam whistleblower suit, filed under the federal False Claims Act, was unsealed on Thursday, July 29, 2021, and is available here. The suit was filed in U.S. District Court for the District of Colorado, but later transferred to the Northern District of California.

Kaiser Permanente has over 217,000 employees and 12.4 million total members throughout California, Colorado, Georgia, Hawaii, Maryland, Oregon, Virginia, Washington, and the District of Columbia. In 2020, Kaiser reported more than $88 billion in operating revenue.

The whistleblower, James M. Taylor, M.D., was employed at Kaiser’s Colorado Permanente Medical Group (CPMG), where he was medical director of revenue cycle/claims and physician director of coding. He is not only a physician but a certified coder and coding trainer who was the recipient of RISE Health’s Martin L. Block Award for Clinical Excellence and Innovation. He was elected to the board of CPMG and was also chairman of the entity for two years. He also served as national co-chair of the Kaiser Permanente’s ICD-10 Compliance Committee, was the delegate representing all physicians in the regions outside of California in Kaiser’s national Coding Governance Group, and was selected to complete Harvard’s Executive Leadership Program. At the time he filed his suit, he was the only physician to have received Kaiser’s National Revenue Cycle “Distinguished Leadership” award.

While a Kaiser employee, Dr. Taylor repeatedly proposed solutions internally to address the issues outlined in his whistleblower complaint, but corrective action was either ignored by the organizations or only briefly implemented before Kaiser would return to prior behavior.

“The scale of this case, and the number of whistleblowers who have come forward, shows how serious the claims are,” said Michael Ronickher, a partner in Constantine Cannon’s Washington, D.C., office and co-lead counsel on the case. “Dr. Taylor’s unique position within Kaiser, along with his deep knowledge of Medicare Advantage compliance, will be key in helping the Department of Justice recover for the frauds he and the other whistleblowers allege.”

Edward Baker, of counsel in Constantine Cannon’s Washington, D.C., office and co-lead counsel on the case, added: “Medicare Advantage fraud, especially on this scale, shows a blatant disrespect for the millions of Americans who rely on the program for their healthcare needs, as well as the taxpayers paying for it. We look forward to bringing this case to a successful resolution.”

The Preeminent Law Firm in Healthcare Whistleblower Cases

Constantine Cannon is the leading law firm in Medicare Advantage whistleblower cases and has deep experience representing all manner of healthcare whistleblowers in False Claims Act lawsuits against health insurance companies, provider groups, and vendors. Among its many cases, the firm represents Benjamin Poehling in the UHG case, the largest False Claims Act lawsuit for Medicare risk-adjustment fraud in history. That suit alleges fraud by UHG that cost taxpayers more than $1.4 billion from 2011 to 2014 alone, according to the Department of Justice. The case is currently expected to go to trial in 2023.

Constantine Cannon also represented Dr. Darren Sewell in a whistleblower suit against Freedom Health and its former COO, which ended in a $32.5 million settlement back to the government—one of the first major settlements of a Medicare Advantage risk-adjustment fraud lawsuit in history. The firm currently represents Teresa Ross, a former employee of Group Health Cooperative, now owned by Kaiser, which agreed in November 2020 to pay $6.375 million to resolve her allegations of improperly collecting inflated payments from the Medicare Advantage program. The Justice Department has sought to intervene in Ross’s related claims against other defendants. Constantine Cannon also represents Kathy Ormsby in a False Claims Act suit against Sutter Health and its affiliates over similar claims of Medicare Advantage fraud.

About Constantine Cannon LLP

With offices in New York, Washington, D.C., San Francisco and London, Constantine Cannon LLP is one of the largest whistleblower practices in the United States. The firm’s team of dedicated whistleblower lawyers represent whistleblowers under federal and state False Claims Acts as well as the whistleblower programs of the IRS, SEC, CFTC, DOT, and others.

Constantine Cannon also has deep expertise in practice areas that include antitrust and complex commercial litigation, government relations, securities, and e-discovery. The firm’s antitrust practice is among the largest and most well recognized in the nation. Constantine Cannon’s experience spans multiple industries, including healthcare, banking, electronic payments, insurance, high tech, telecommunications, the Internet, and government contracting.

For more information, visit the Constantine Cannon website, at constantinecannon.com.

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