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$32.5 Million Settlement for Whistleblower Lawsuit Alleging Medicare Advantage Fraud

In a long-running qui tam case brought under the federal False Claims Act, the government has announced a settlement of allegations originally made by late whistleblower, Dr. Darren D. Sewell, M.D., of Medicare fraud against several health care insurers and providers, who will pay $32.5 million under the settlement. Dr. Sewell alleged that Freedom Health and Optimum Healthcare, both large health insurers that participate in Medicare coverage in Tampa, Florida, took advantage of the Medicare system by falsifying or exaggerating patients’ health to receive more Medicare money to treat those patients. Additionally, the case alleged that Freedom Health and Optimum Healthcare convinced the Medicare program to allow them to expand health insurance offerings in Florida even though they did not have a sufficient network of doctors to support such an expansion. This whistleblower case brought under the False Claims Act is especially notable for its settlement amount. Freedom Health and Optimum Healthcare will pay the U.S. government $16.7 million to settle allegations of risk adjustment fraud, and $15 million for allegedly expanding service under the pretenses of fraud. This is one of the largest risk adjustment fraud settlements in the country.

Dr. Sewell died in 2014, but worked at Freedom Health and Optimum Healthcare from 2007 to 2012 as chief medical officer before transferring to the Medicare Revenue Management Department as vice president of special projects. Sewell filed his lawsuit in 2009 after learning about Freedom and Optimum’s scams for garnering more and more money from Medicare and Medicaid. Freedom Health and Optimum Healthcare took advantage of a new feature of the Medicare Advantage Program called risk adjustment. This feature, introduced in 2004, scores Medicare patients by the severity of diagnoses that correspond with increasing amounts of additional Medicare funds to support the treatment of those patients. Freedom and Optimum knowingly submitted false patient scores in order to receive additional funding and attempted to expand its services without proper personnel to further the amount of Medicare funding it could receive. After its in-depth investigation, the U.S. government alleged that these health care providers submitted unsupported diagnoses to Medicare and materially misrepresented the scope and context of its network of providers. The $32.5 million total settlement resolves these allegations with no admission of guilt.

Nevertheless, Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division stated, “Today’s result sends a clear message to the managed care industry that the United States will hold managed care plan providers responsible when they fail to provide truthful information.”

Dr. Sewell is survived by his daughter, parents, and brothers. Under the False Claims Act, the estate of Dr. Sewell is entitled to receive between 15 and 25 percent of the $32.5 million recovered by his successful False Claims Act lawsuit.

Health care insurers and providers such as Freedom Health and Optimum Healthcare in the State of Florida engage in government programs fraud by submitting false claims to Medicare and Medicaid every day. If you are aware of a company that is engaging in these illicit practices, do not hesitate to take action. The law firm of Tycko & Zavareei LLP may be able to assist you in bringing your own qui tam lawsuit under the False Claims Act, acting as a whistleblower on behalf of the U.S. government. Successful qui tam whistleblowers can receive, as their reward, between 10% and 30% of the amount recovered for the government. If you would like to consult with one of our False Claims Act attorneys please fill out our Confidential Case Evaluation form, or call (202) 973-0900 to speak with a lawyer within our firm.

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