The False Claims Act (FCA) remains the government’s primary weapon against fraud in federal programs, including Medicare Advantage Plans – programs now serving nearly half of all Medicare beneficiaries. With $15 billion in Part C overpayments identified in fiscal year 2021 (7% of total payments), the stakes are substantial.
In this article, we will explore the special master’s Report and Recommendation to the District Court in United States ex rel. Poehling v. UnitedHealth Group and the implications of that case for Medicare Advantage plan providers. We will also do a quick run through the basics of the False Claims Act enforcement in the Medicare Advantage context.
United States ex rel. Poehling v. UnitedHealth Group
In United States ex rel. Poehling v. UnitedHealth Group, the government alleged UnitedHealth Group (UHG) knowingly obtained inflated risk adjustment payments by:
- Ignoring chart reviews showing invalid diagnoses
- Failing to repay Medicare for payments based on unsupported diagnoses
- Disregarding information about invalid diagnoses from providers with financial incentives to report them.
The government claimed the amount of overpayment was $2.1 billion, creating a potential treble damage exposure to UHG of more than $6 billion.
Despite these allegations, this past Monday, March 3, 2025, a special master entered a Report and Recommendation to the District Court recommending the entry of summary judgment for UHG, finding:
- The government’s expert hadn’t reviewed medical charts before deeming 1.97 million codes unsupported
- No evidence of deception existed
- UHG hadn’t prevented the government from knowing about its medical record review program
- “There simply was no fraud”
Implications for Medicare Advantage Providers
Given the potential for billions in damages, this case underscores key compliance imperatives for MAOs:
- Ensure retrospective reviews comply with CMS regulations.
- Balance code additions with appropriate deletions.
- Maintain complete, up-to-date encounter data with diagnoses supported by medical records.
- Implement robust compliance programs, including:
- Clear tone from leadership
- Reasonable policies and controls
- Employee training
- Program monitoring
- Prompt investigation and remediation
Medicare Advantage Risk Adjustment: The Basics
Medicare Advantage Organizations (MAOs) receive monthly payments based on enrollee health status. This risk-adjusted payment system relies on:
- Hierarchical Condition Categories (HCCs) assigned to enrollees
- Diagnosis codes submitted by MAOs to CMS
- Risk scores that adjust base payment rates
Federal regulations require all submitted codes to be supported by medical records. MAOs must certify their data’s accuracy and maintain effective compliance programs. Contract-level Risk Adjustment Data Validation (RADV) audits serve as CMS’s primary oversight mechanism.
FCA Liability Framework
An FCA violation requires four elements:
- A false statement or fraudulent course of conduct
- Scienter (knowledge)
- Materiality
- Resulting government payment
Under Universal Health Services v. Escobar, the Ninth Circuit requires that claims must both make specific representations about services provided and that nondisclosure of noncompliance renders those representations misleading half-truths.
“Knowingly” means actual knowledge, deliberate ignorance, or reckless disregard of truth or falsity—no specific intent to defraud is required.
“Material” means having a natural tendency to influence payment decisions. As the Supreme Court noted, materiality may be evidenced by:
- Government’s consistent refusal to pay similar noncompliant claims
- Government payment despite actual knowledge of violations (strong evidence against materiality)
- Government’s regular payment patterns despite known violations (strong evidence against materiality)
Conclusion
While the government aggressively pursues FCA cases against MAOs, the Poehling recommendation demonstrates the challenges in establishing essential FCA elements. With treble damages and penalties ranging from $14,308 to $28,619 per violation, compliance is essential.
This case also highlights the importance of standing your ground when you are in the right. Too often, businesses—understandably wary of the risks—choose to settle rather than stand their ground and litigate.
