On May 1st the U.S. Department of Justice (DOJ) filed a False Claims Act (FCA) complaint alleging Medicare Advantage fraud against UnitedHealthcare’s parent company, UnitedHealth Group, Inc.  (UHG). The complaint alleges that UHG obtained inflated risk adjustment payments based on untruthful and inaccurate information about the health status of beneficiaries enrolled in UHG’s Medicare Advantage Plan. That complaint comes shortly after the government decided in February to intervene in a whistleblower suit first brought by James Swoben in 2009 related to that same issue.

By way of background, Swoben claims that UHG’s Medicare Advantage Plans retrospectively looked at patients’ diagnostic codes with the sole purpose of finding unreported or under reported codes, but deliberately designed their chart reviews and audits to prevent the discovery of unsupported or up-charged codes.  By doing so, UHG sought increased reimbursement from Medicare based on the make-up of its Medicare Advantage Plan’s patient population.  Swoben alleges that those chart reviews violated the FCA based on UHG’s certification that the patient diagnostic codes accurately portrayed their patient population as determined by due diligence performed through UHG’s chart reviews.  However, because UHG only focused on the positive payment adjustments and not potential negative payment adjustments, that certification was false.  The DOJ, in their complaint, states that the due diligence requirement under CMS prohibits a Medicare Advantage Plan from designing a chart review procedure that does not “look both ways”.  A Medicare Advantage Plan must implement compliance programs that exercise reasonable diligence to ensure the data being submitting is accurate, regardless of whether it will effect the Plan in a positive or negative way.

UHG is the nation’s largest Medicare Advantage Organization.  The potential damages for this case exceed $1 billion.  That would place the Swoben-UHG case among the top whistleblower-promoted cases on record.  The DOJ has also combined Swoben’s lawsuit with another whistleblower suing UHG under similar pretenses.

Our firm has been monitoring this case as a result of its impact on our clients and the overly burdensome Medicare Advantage audits that they continue to encounter.  Although the DOJ has made clear that chart reviews and audits are an essential part of the insurance companies’ duties under the FCA, the Medicare Advantage Plans cannot conduct audits in a manner that only ensures increased payments.  Accordingly, the Swoben-UHG case may have an impact on the method in which Medicare Advantage Plans audit providers moving forward.

​This summer, three (3) northeastern states passed laws which impose restrictions on non-compete provisions in employment, partnership and ownership contracts with physicians.  Specifically, Connecticut’s, Rhode Island’s, and New Hampshire’s new laws greatly limit those instances in which a physician may waive his/her right to practice within a geographic location.  In Connecticut, effective July 1, 2016, physician non-compete provisions must be limited to one (1) year after a for-cause termination by the employer and fifteen (15) miles from the physician’s primary practice site or another office expressly set out in the non-compete provision.  See the complete Connecticut Public Act No. 16-95 at https://www.cga.ct.gov/2016/act/pa/pdf/2016PA-00095-R00SB-00351-PA.pdf for these and other limitations imposed on physician non-compete provisions.  The new Rhode Island law, effective July 12, 2016, extends the limitations on physician non-compete provisions even further by prohibiting such provisions in all instances except those in which a physician is restricted from competing with a practice he/she sells.  In such instances, the physician may be restricted from competing for a period of five (5) years.  See the complete law prohibiting Rhode Island non-competes against physicians at http://webserver.rilin.state.ri.us/Statutes/TITLE5/5-37/5-37-33.HTM.  Finally, the new New Hampshire law, effective for new and renewal agreements as of August 7, 2016, placed an absolute prohibition on non-compete provisions which limit a physician’s ability to practice medicine in a certain geographic location.  See the complete language of this prohibition at http://www.nhms.org/sb417-non-compete-clauses-physician-contracts.
 
In addition to the enactment of new laws, the Supreme Court of Nevada also made a ruling this summer which may have an impact on an employers’ decisions whether, and the extent of which, to include a non-compete provision in their employment agreements. Specifically, on July 21, 2016, in Golden Road Motor Inn, Inc. v. Islam, 376 P .3d 151 (2016), the State Supreme Court held that an unenforceable non-compete provision in a contract rendered the entire contract unenforceable. Accordingly, whereas other states may permit their courts to “blue pencil” an unenforceable non-compete by revising it in a manner that is consistent with state law, the Nevada Court held that it was not the position of the courts to make such revisions. See the entire Nevada Supreme Court opinion at http://caselaw.findlaw.com/nv-supreme-court/1743327.html.

​On December 7, 2016, the U.S. Department of Health and Human Services’ Office of Inspector General (“OIG”) published the final rule codifying revisions and additions to the Anti-Kickback Statutes’ (“AKS”) safe harbors and Civil Monetary Penalties Law’s (“CMPL”) exceptions.  Pursuant to this final rule, effective January 6, 2017, new safe harbors have been added to the AKS for: (1) certain cost-sharing waivers for pharmacy and ambulance services; (2) discounts as part of the Medicare Coverage Gap Discount Program; and (3) free or discounted local transportation services to established patients.  In addition, new exceptions have been added to the CMPL for: (1) copayment reductions for certain hospital outpatient department (“HOPD”) services; (2) services promoting access to care while posing a low risk of harm; (3) coupons, rebates and other retailer rewards programs; (4) discounts and waivers for the financially needy; and (5) copayment waivers for a patient’s first fill of a generic drug.  Additional information regarding these safe harbors and exceptions, including the specific criteria necessary to meet each, is available on the federal register at: https://www.federalregister.gov/documents/2016/12/07/2016-28297/medicare-and-state-health-care-programs-fraud-and-abuse-revisions-to-the-safe-harbors-under-the.