In a deal with the government, a California medical group has agreed to pay $5 million to resolve allegations of Medicare fraud under the False Claims Act.

On Aug. 8, the U.S. Department of Justice (DOJ) announced that it had reached the settlement with Beaver Medical Group LP and one of the group’s physicians, Dr. Sherif Khalil. The parties agreed to pay a combined $5,039,180 to resolve claims that they used incorrect diagnoses to submit false Medicare Advantage claims.

“The United States relies on healthcare providers to submit accurate diagnosis data to Medicare Advantage plans to ensure those plans receive the appropriate compensation from Medicare,” Assistant Attorney General Jody Hunt of the DOJ’s Civil Division said in a news release. “We will pursue those who undermine the integrity of the Medicare program and the data it relies upon.”

Medicare Advantage, also called Medicare Part C, allows Medicare beneficiaries to obtain health insurance through private insurance plans. This may include coverage for vision, hearing, dental, and/or health and wellness programs. Most plans include prescription drug coverage under Medicare Part D. These plans are provided by private insurers known as Medicare Advantage Organizations (MAOs).

Each month, Medicare provides MAOs with a fixed amount to provide healthcare coverage to beneficiaries enrolled in Medicare Advantage. The sicker the beneficiaries, the more MAOs may be paid by Medicare. MAOs may partner with specific healthcare providers who report diagnoses and other information that is used by MAOs to obtain adjusted payments from Medicare.

It’s important that claims to Medicare Advantage remain accurate and free of fraud. Fraudulent claims result in taxpayers and the government paying more for services than they should. Medicare fraud may also compromise patient care if healthcare providers are motivated by greed instead of good will.

“As enrollment in Medicare Advantage continues to grow, investigation into accuracy of diagnosis data becomes ever more important,” said Timothy B. Francesca, Acting Special Agent in Charge for the Office of Inspector General of the U.S. Department of Health and Human Services, according to the DOJ release.  “Those who inflate bills sent to government health programs can expect to pay a heavy price.”

Beaver Medical Group allegedly partnered with MAOs in California to provide healthcare. However, the company allegedly reported inaccurate diagnoses that would result in higher Medicare payments for MAOs. Beaver allegedly received a cut of these higher payments in exchange for knowingly inflating reported diagnoses.

Awards for Whistleblowers

The allegations of Medicare fraud were brought in a False Claims Act lawsuit by whistleblower plaintiff David N. who had worked for Beaver Medical and brought the False Claims Act lawsuit against the company after allegedly witnessing fraud. As compensation for his work as the whistleblower, David will receive about $850,000, according to the Department of Justice.

The False Claims Act is a federal law that allows private citizens to bring lawsuits on behalf of the federal government. These lawsuits may be called qui tam lawsuits, referring to the Latin phrase qui tam pro domino rege quam pro se ipso in hac parte sequitur meaning “[he] who sues in this matter for the king as well as for himself.” Under False Claims Act lawsuits, the plaintiffs may be entitled to between 15 percent and 25 percent of the total recovery.

This article is not legal advice. It is presented
for informational purposes only.