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U.S. Pursuit of Risk Adjustment Fraud Continues with Complaint in Intervention in Case Filed by Constantine Cannon Client against Independent Health and its Coding Subsidiary DxID

Posted  September 16, 2021

In July, we wrote that managed care enforcement had reached a “tipping point,” as the Department of Justice intervened in whistleblower cases against Kaiser Permanente alleging risk adjustment fraud, including a case brought by Constantine Cannon client Dr. James Taylor.  Just last month, we announced a $90 million settlement in a different Medicare Advantage risk adjustment fraud case brought by Constantine Cannon client Kathy Ormsby against Sutter Health.

Now, for the third month in a row, another Medicare Advantage risk adjustment fraud case brought by a Constantine Cannon client has advanced, with the government’s filing of a complaint in intervention in a case against Medicare Advantage Organization Independent Health (IH), its coding consultant subsidiary DxID LLC (DxID) and Betsy Gaffney, former CEO of DxID.  Constantine Cannon client Teresa Ross first filed the qui tam action under the False Claims Act, which permits private parties to sue on behalf of the government for false claims and to receive a share of any recovery.

Ms. Ross and the government allege that IH, an HMO with approximately 380,000 members, knowingly submitted false diagnoses to increase risk adjustment payments it received under the Medicare Advantage program.  IH created and hired DxID for retrospective chart review and addenda services, and the case represents one of the first times that the federal government has targeted a coding company in risk adjustment litigation.  DxID, which also provided these services to other Medicare Advantage organizations, mined charts for upcoding opportunities that could fraudulently increase payments.  DxID billed MAOs on a contingency basis, receiving up to 20% of additional payments the MAOs received.

The United States alleges that DxID, led by Gaffney, coded conditions that were not documented in the patient’s medical record during a visit or encounter. The government’s complaint in intervention also alleges that DxID also asked health care providers to sign addenda forms up to a year after a visit or an encounter, going back into files long after physician visits to add diagnosis codes to patient medical records that weren’t based on a physician’s assessment, but rather on laboratory tests, durable medical equipment claims, or diagnostic testing.  IH then used the addenda as substantiation for adding risk-adjusting diagnoses that were not documented during the patient encounter, in violation of Medicare requirements. According to the DOJ complaint, such actions at times led to absurd results, such as cases where a visit to the ophthalmologist resulted in a coding of pancreatitis, or a visit to a dermatologist resulted in a coding of diabetes.

The government alleges that DOJ alleges that DxID submitted thousands of unsupported medical condition codes on behalf of Independent Health between 2010 and 2017, resulting in “tens of millions” of dollars in overcharges.

Press Coverage of Government Intervention against Independent Health and DxID

The government’s intervention has attracted press attention, including from Modern Healthcare (subscription required) and Fred Schulte, whose analysis of the case was published by Kaiser Health News and National Public Radio.  Constantine Cannon attorney Max Voldman was quoted as hoping that the case “sends a message that coding companies that exist only to enrich themselves by violating many, many CMS rules will face consequences.”  Additionally, the US Attorney for the Western District of New York was interviewed about the case for the local CBS affiliate.

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. Constantine Cannon’s risk adjustment work includes:

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Tagged in: FCA Federal, Healthcare Fraud, Importance of Whistleblowers, Managed Care, Risk Adjustment Fraud, Whistleblower Case,


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