Constantine Cannon: U.S. Files Complaint in Whistleblower Lawsuit Against Kaiser Permanente Claiming Extensive Medicare Advantage Fraud

NEW YORK, Oct. 26, 2021 /PRNewswire/ -- The United States Department of Justice (DOJ) has filed its complaint in intervention in a Constantine Cannon whistleblower's lawsuit against Kaiser Permanente and its various regional affiliates. The complaint alleges False Claims Act (FCA) violations resulting in enormous losses for the taxpayer-funded Medicare Advantage program.

Under Medicare Advantage (also known as Medicare "Part C"), Medicare beneficiaries receive coverage through private health providers, or Medicare Advantage Organizations (MAOs). The Centers for Medicare & Medicaid Services (CMS) covers these beneficiaries by paying premiums to the MAOs. Generally, patients diagnosed with more, or more severe, conditions receive a higher risk-adjusted premium payments from CMS. Kaiser Permanente and its affiliates allegedly defrauded the government by intentionally submitting diagnosis claims that were unsupported by patients' medical records, resulting in inflated risk-adjusted premiums ­–– overcharging the government by millions of dollars.

A "Dash for Cash"

The government's complaint focuses on unsupported diagnosis codes that Kaiser added through addenda, or late amendments, to patients' medical records  to increase risk-adjusted premiums paid to Kaiser. These addenda allegedly often included unsupported diagnoses, diagnoses that did not affect patient care, or diagnoses that were otherwise unrelated to a patient encounter, in violation of Medicare rules.

The complaint describes Kaiser's alleged systems of encouraging physicians to add diagnoses that they had not considered, evaluated, or treated, citing one Kaiser medical coder who reported over 50% of physicians feeling "forced" to do so. Additionally, the complaint cites a 2015 audit that concluded that diagnoses added though addenda had an error rate of 75%.

According to the complaint, pressure to code from addenda grew as annual deadlines for submitting diagnosis data grew near and corporate financial targets loomed. Employees referred to this time of year as a "dash for cash."

Kaiser Permanente, which has 220,000 employees, boasting a total membership of 12.4 million people in California, Colorado, Georgia, Hawaii, Maryland, Oregon, Virginia, Washington, and the District of Columbia. In 2020, Kaiser reported more than $88 billion in operating revenue.

The whistleblower, James M. Taylor, M.D., was the medical director of revenue claims and physician director of coding at Kaiser's Colorado Permanente Medical Group (CPMG). As a certified coder and coding trainer, Dr. Taylor continually proposed internal solutions, which would either be briefly adopted before reverting to fraudulent activity or ignored completely. Dr. Taylor's qui tam whistleblower suit, filed under the federal False Claims Act, was unsealed on Thursday, July 29, 2021. His complaint is available here.  The suit was filed in the U.S. District Court for the District of Colorado, but later transferred to the Northern District of California.

"Dr. Taylor was well positioned to help expose this alleged fraud and hopes to help recover the enormous amount of money taken out of taxpayers' pockets," said Michael Ronickher, a partner in Constantine Cannon's Washington, D.C., office and co-lead counsel on the firm's case. "The fact that he is one of ten whistleblowers to come forward against Kaiser Permanente shows just how widespread this alleged fraud was within the organization."

Edward Baker, of counsel in Constantine Cannon's Washington, D.C., office and co-lead counsel, said: "The government continues to send a clear message that risk adjustment fraud can and will be punished. Whistleblowers are a key part of the government's toolbox and can be rewarded as such."

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 $1billion from 2011 to 2014 alone, according to the Department of Justice. 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, which settled in September for $90 million.

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.

For more information, visit the Constantine Cannon website, at https://constantinecannon.com/.

Contact:
PRCG | Haggerty LLC
(212) 683-8100
Lucy O'Brien, [email protected]
Cristopher Bruce, [email protected]

SOURCE Constantine Cannon LLP

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