For the first fifteen years of his legal career, William Hanagami represented insurance companies.

For the last fifteen, he’s been suing insurance companies.

Now, he’s riding a tiger — a whistleblower lawsuit against UnitedHealth Group, alleging the nation’s largest Medicare Advantage company defrauded Medicare for hundreds of millions of dollars.

Hanagami’s client, James Swoben, is accusing UnitedHealth Group of improperly gaming a program known as risk adjustment, or risk scoring — by claiming its members were treated for conditions they either did not have or were not treated for.

Last week, the Justice Department joined the lawsuit and sought to join it with another whistleblower lawsuit claiming the same fraud.

UnitedHealth is being represented by David Schindler and Daniel Meron of Latham & Watkins.

The lawsuits allege that UnitedHealth submitted exaggerated risk-adjustment claims to Medicare.

Medicare makes additional payments to managed-care plans based on plan enrollees’ health-risk scores, which are calculated using patients’ medical diagnoses.

Higher risk scores are supposed to reflect treatment of sicker patients, and risk-adjustment reimbursement is designed to offset increased costs associated with treating these patients.

The lawsuits claim that UnitedHealth collected and retained payments from claims that falsely stated its beneficiaries were treated during the relevant period for diagnoses the beneficiaries did not have, more severe diagnoses than the beneficiaries had, diagnoses for which beneficiaries were previously treated but that were not treated in the relevant year, and diagnoses that otherwise failed to meet federal requirements for risk adjustment.

The lawsuits claim that UnitedHealth failed to correct previously submitted Medicare risk adjustment claims even though it knew, or should have known, that those claims were false. Under Medicare rules and regulations, the company was required to report and reimburse the government for any overpayments.

UnitedHealth’s top executives created a culture that demanded and rewarded increasing financial success of its risk adjustment efforts, the suit claims.

This led to programs, masked as clinical initiatives, that simply sought additional reimbursement while ignoring information that showed UnitedHealth was being overpaid in many instances.

One way UnitedHealth overstated its members’ risk scores was by performing a “one way look” into patient medical records for additional risk-adjusting diagnoses rather than “looking both ways” by also reviewing for previously submitted, unsupported diagnoses and deleting those invalid claims, according to the complaint.

When UnitedHealth did do audits of its previously submitted claims, it found high error rates yet, UnitedHealth refused to take meaningful, widespread steps to identify and rectify the problems with the claims it submitted to Medicare.

“They do something called blind chart reviews,” Hanagami told Corporate Crime Reporter in an interview last week. “The problem is when you do a blind review, you are not validating the diagnosis codes that you already sent. If there were some diagnosis codes that should not have been sent when they were originally generated, this type of chart review will not uncover those. If it is not supported by the medical chart, the reviewer is not going to find it.”

“It’s an audit designed to add diagnostic codes. It’s not designed to uncover upcoding. It results in adds but does not result in any deletes. UnitedHealth has what we call RADV Audit rates north of 30 percent.”

What is an RADV audit?

“RADV audit — a risk adjustment data validation audit. This historically was performed at the behest of CMS. CMS would tell the Medicare HMOs like United — they would have the HMO select 201 charts to be reviewed by CMS. The HMO would select 201 charts. Send those charts to CMS.”

“Then CMS would come back and tell the HMO how many of the charts did not support the diagnosis codes they submitted. UnitedHealth regularly had RADV audit rates in excess of 30 percent. Thirty percent of the charts did not support the diagnosis codes they submitted. During the time period we are litigating about, the CMS did not extrapolate those RADV audit rates across the board.”

“Even though they may have had an audit rate of 30 percent, the only burn to the HMO would be that they would have to withdraw the diagnosis codes from those diagnosis codes that failed.”

The audits only added to the bills to Medicare, they didn’t subtract from the bills?

“Correct. They only added. They were specifically designed to only add diagnostic codes.”

You believe this is a billion dollar case?

“If you take into consideration the previously submitted diagnosis codes were unsupported by the reviewed medical charts and how many of those should have been withdrawn — and how that should have resulted in a decrease in risk adjustment factors for millions of patients.”

“One of the basic principles of auditing is that you report the ups and the downs, the good and the bad. If the true purpose of the audit is to make things accurate, that is what you have to do.”

What percentage of the Medicare Advantage market does UnitedHealth have?

“Roughly 40 percent.”

[For the complete q/a transcript of the Interview with William Hanagami, see 31 Corporate Crime Reporter 16(11), Monday April 17, 2017, print edition only.]