U.S. Intervenes in Whistleblower Lawsuit brought by Constantine Cannon Client against Independent Health and Related Entities for Defrauding Medicare Advantage Program

• Medicare Advantage Organization and its subsidiaries allegedly ignored federal guidelines for proper coding of medical conditions for Medicare Part “C” reimbursement
• In a rare move, a medical coding review company owned by IH is also a party named in the complaint, along with a key executive who allegedly helped the insurer game the system

The United States Department of Justice (DOJ) has filed its complaint in intervention in a Constantine Cannon whistleblower’s lawsuit against Independent Health Association (IH), coding consultant subsidiary DxID LLC (DxID) and Betsy Gaffney, former CEO of DxID. The complaint accuses them of violating the False Claims Act (FCA) by knowingly submitting false diagnoses for risk-adjusted payments, resulting in overpayments of tens of millions of dollars from the Medicare Advantage program.

The DOJ complaint alleges numerous examples of blatant fraudulent activity conducted by Independent Health and its subsidiaries—including 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.

Medical coding consultant DxID, led by its CEO Ms. Gaffney, allegedly repeatedly misrepresented Centers for Medicare & Medicaid Service (CMS) rules to enhance Medicare Advantage reimbursement. 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.

Independent Health is a Western New York-based health maintenance organization that covers and provides hundreds of services to approximately 380,000 people across the country. In 2019, Independent Health reported more than $1.4 billion in revenue. DxID was headquartered in Buffalo until it ceased operations in August.

The whistleblower, Teresa Ross, is a former employee of Group Health Cooperative (GHC), a Seattle, Washington based nonprofit healthcare organization, where she originally identified the alleged fraud that she reported to the government in a 2012 False Claims Act qui tam lawsuit against the defendants. In November 2020, GHC settled related allegations, agreeing to pay $6.375 million.

Under Medicare Advantage (also known as Medicare “Part C”), Medicare beneficiaries have the option to receive health care coverage through private companies known as Medicare Advantage Organizations. These Medicare Advantage Organizations are paid premiums by CMS for covering those beneficiaries. CMS adjusts these premium payments (referred to as risk-adjustment) based on numerous factors that include health status and demographic information. In general, the CMS increases risk-adjusted premiums to MAOs for beneficiaries who are diagnosed with more conditions than for those diagnosed with fewer conditions.

“Whistleblowers who want to do the right thing are essential to uncovering complex patterns of fraud like this one,” said Michael Ronickher of Constantine Cannon, lead counsel on the case. “Teresa Ross has shown how courageous individuals can work hand in hand with the government to protect important taxpayer-funded programs.”

The lawsuit filed under the False Claims Act is available here. The DOJ complaint intervening in the case was filed Monday, September 13, 2021 in the U.S. District Court for the Western District of New York.

“DOJ’s complaint sends a strong message: MA coding companies that violate CMS rules and defraud the government for the sake of profit will face consequences.” said Max Voldman of Constantine Cannon, an attorney on the case. “This development is the latest in a flurry of recent activity around Medicare Advantage fraud, showing the government’s commitment to the integrity of the Medicare Advantage program”

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 a case against UnitedHealth Group, 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 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 represents whistleblower Kathy Ormsby in False Claims Act litigation against Sutter Health and its affiliates over similar claims of Medicare Advantage fraud. In early September, the Sutter Health defendants agreed to a $90 million settlement, which is the largest against a hospital system involving allegations of fraud on the Medicare Advantage program and the second largest Medicare Advantage fraud settlement ever.

A Constantine Cannon client is also a key whistleblower in a False Claims Act lawsuit against Kaiser Permanente, one of the largest managed-care organizations in the country. The Department of Justice recently announced its intervention in a series of lawsuits against Kaiser Permanente and various regional affiliates, which are accused of knowingly submitting false claims to CMS.

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.

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.