United States Reaches a “Tipping Point” in Managed Care Enforcement: DOJ Intervenes in Constantine Cannon’s Lawsuit Against Kaiser Permanente

In a sign that the government’s enforcement efforts against fraud in the Medicare managed care system have reached a tipping point, the U.S. Department of Justice announced today that it is joining a portion of a whistleblower lawsuit brought by a Constantine Cannon client under the False Claims Act against Kaiser Permanente and affiliated entities, one of the nation’s largest managed-care organizations.  Simultaneously, the government also partially joined five other lawsuits by an additional nine whistleblowers.  All of the actions are now consolidated into one matter in the Northern District of California.  The DOJ is expected to file a complaint-in-intervention by late October.

DOJ’s Focus on Risk Adjustment Payments Based on Unsupported Diagnoses

The lawsuits generally allege that Kaiser Permanente and its various regional affiliates defrauded Medicare by improperly inflating its risk adjustment reimbursement.  Medicare makes additional payments to managed-care plans like Kaiser Permanente based on plan members’ risk scores, which are calculated in part using patients’ medical diagnoses. Higher risk scores are assigned to patients with more costly-to-treat conditions, while those with less costly conditions receive lower scores.  Ideally, risk-adjustment payments offset increased costs associated with treating sicker patients.

The portion of Constantine Cannon’s and the five other complaints joined by DOJ relate to allegations that Kaiser routinely obtained fraudulent risk-adjustment payments by knowingly submitting diagnosis codes for patients that were unsupported by the medical record.  The government’s intervention focuses on unsupported diagnosis codes that Kaiser allegedly improperly added through addenda to patients’ medical records.

Constantine Cannon’s Whistleblower Client is Uniquely Positioned to Pursue DOJ’s Claims

Constantine Cannon’s whistleblower client, James Taylor, M.D., is uniquely positioned in the consolidated matter because of the seniority of the positions he held at Kaiser, his status as a physician, and the depth and breadth of his expertise in Medicare Advantage coding and compliance.

Specifically, Dr. Taylor was employed at Colorado Permanente Medical Group (CPMG), a Kaiser entity operating in Colorado, where he was medical director of revenue cycle/claims and physician director of coding. 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 and was the delegate representing all physicians in the regions outside of California in Kaiser’s national Coding Governance Group. At the time he filed his suit in 2014, he was the only physician to have received Kaiser’s National Revenue Cycle “Distinguished Leadership” award. He has also received RISE Health’s Martin L. Block Award for Clinical Excellence and Innovation.

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

Dr. Taylor’s complaint, originally filed in 2014, had been kept under seal to allow the government time to investigate, and is now public due to the DOJ’s decision to partially intervene.

Constantine Cannon Is the Preeminent Law Firm in Risk Adjustment Cases

Constantine Cannon is the leading law firm in Medicare Advantage and risk advantage fraud 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, probably 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. In November 2020, Kaiser agreed to pay $6.375 million to resolve Ross’s allegations of improperly collecting inflated payments from the Medicare Advantage program. The Justice Department has sought to intervene in Ross’s related claims related claims against other defendants, which are still pending. 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.

Read More:

• Press Release: US Justice Department Intervenes in Whistleblower Suits Against Kaiser Permanente Alleging Extensive Fraud in Its Multi-Billion-Dollar Medicare Advantage Business
• False Claims Act
• Healthcare & Pharmaceutical Fraud
• Fraud in Managed Care Programs
• Risk Adjustment Fraud in Healthcare
• Our Whistleblower Team
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