Judge: 'Too many assumptions' in man's Medicare fraud class action vs United Healthcare over home visits

By Dana Herra | Jun 22, 2018

A federal court has dismissed a lawsuit a man attempted to bring against his insurance company, ostensibly on behalf of the federal government, claiming the UnitedHealthcare was defrauding Medicare by scheduling unnecessary in-home nurse visits for him and others.

A federal court has dismissed a lawsuit a man attempted to bring against his insurance company, ostensibly on behalf of the federal government, claiming the UnitedHealthcare was defrauding Medicare by scheduling unnecessary in-home nurse visits for him and others.

Jeffery Gray filed suit against UnitedHealthcare Insurance Company and its related entities claiming the company had defrauded Medicare by providing him with a free in-home visit by a nurse practitioner and a $25 Walmart gift card as an incentive for scheduling the visit.

UnitedHealthcare participates in the Medicare Advantage program, which allows people to receive benefits through private insurance companies instead of from traditional Medicare. Under the program, the insurer contracts with the government to bear the health care costs and manage the care of Medicare beneficiaries. The government pays the insurer a specified per-member-per-month amount meant to reflect what the beneficiary would probably draw from traditional Medicare. This amount is calculated through a formula based on the individual’s health – if the person is diagnosed with a chronic or debilitating illness, the amount Medicare would pay their insurer per month would theoretically go up because they have become more expensive to treat.

In his suit, Gray, a Medicare Advantage beneficiary, said United contacted him in 2014 and offered him a free in-home physical by a licensed healthcare provider. He initially declined, but later accepted after he was offered a $25 Walmart gift card.


Michael I. Behn  

Gray claimed the gift card offer violates federal anti-kickback laws and that United’s offer of free in-home visits not ordered by a doctor were just a ruse for the insurer to diagnose new ailments that would move a beneficiary into a higher Medicare reimbursement bracket.

In granting United’s motion to dismiss the suit, Judge Thomas M. Durkin said repeatedly that Gray identified no other recipients of in-home visits and offers no evidence to justify his claims that the “vast majority of [United’s] in-home examined beneficiaries were not certified as being medically warranted to receive an in-home examination” and that Medicare overpaid United based upon the unnecessary exams.

Durkin said Gray’s express false certification theory fails because he offers no evidence that United filed diagnoses it knew to be false. The arguments he presents, the court wrote, are not violations because they are immaterial to the government’s decision to pay United the locked-in per-member-per-month rate.

“[The governmental entity that pays Medicare Advantage plans] has stated that it will not exclude, for payment purposes, diagnoses obtained through in-home examinations,” Durkin wrote. “Gray also fails to identify any violated regulations indicating data from in-home examinations is material to CMS’s determination of the capitated payment amount.”

That locked-in per-member amount is paid to United regardless of whether the individual seeks any health care, the court wrote. United’s offer of in-home exams is an example of what the Medicare Advantage program is intended to do – convince people to get regular exams to identify and get treatment for health conditions before they become serious.

“United paid for the in-home examinations itself, and then provided services to its plan participants free of charge,” the court wrote. “There is no incentive to over-utilize; there is no guarantee United will recover high-risk data from the in-home examinations.”

Gray’s theory is that the in-home exams would turn up diagnoses that United could then use to move beneficiaries to a higher-reimbursement tier, but that theory requires a number of assumptions, Durkin wrote – that the exam would turn up a diagnosis, that the individual would not have gone to a doctor and received the diagnosis on their own and that the diagnosis would alter the individual’s Medicare calculation formula enough to result in greater reimbursement.

“Gray’s theory requires too many assumptions and lacks concrete details,” Durkin wrote in dismissing the complaint. “The court is not convinced that Gray can amend the deficiencies in his complaint based on the alleged scheme. …Nevertheless, … the court will grant Gray the opportunity to file a motion for leave to amend that describes how an amended complaint would cure the deficiencies raised in this opinion.”

Gray has until July 3 to request leave to file an amended complaint, which Durkin said must include a redlined comparison that would show how the amended complaint would fix the problems the court identified with the dismissed version.

Gray is represented by attorneys Michael I. Behn, of Behn & Wyetzner, Chartered, of Chicago; Abram J. Zinberg, of the Zinberg Law Firm APC, of Huntington Beach, Calif.; and William K. Hanagami, of The Hanagami Law Firm, APC, of Woodland Hills, Calif.

United Healthcare is represented by attorneys Sean M. Berkowitz, Daniel Meron, Benjamin W. Snyder and Kirstin S. Do, of the firm of Latham & Watkins LLP, of Chicago.

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Behn & Wyetzner Latham and Watkins LLP U.S. District Court for the Northern District of Illinois United Healthcare Inc

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