DOJ’s UnitedHealth investigation likely biggest Medicare Advantage fraud probe yet

The federal government has increased scrutiny of Medicare fraud in recent years, but no investigation appears bigger than its probe of UnitedHealth Group.

The inquiry is the biggest because UnitedHealth is the nation’s largest provider of Medicare Advantage benefits, a privatized form of Medicare. And United’s Medicare business is the target of not only a civil inquiry, but an uncommon criminal investigation, too.

“The Department of Justice’s actions against [Medicare Advantage insurers] have been civil, focused on recovering money,” said David Lipschutz, co-director of the Connecticut-based Center for Medicare Advocacy. “I don’t recall any criminal cases.”

The Eden Prairie-based health care giant on Thursday acknowledged that it’s cooperating with the Justice Department in criminal and civil probes.

“The enhanced [civil and criminal] scrutiny of UnitedHealth raises the profile of this investigation,” said Eagan Kemp, a health care policy advocate for Public Citizen, a nonprofit public interest group in Washington, D.C.

The taxpayer-funded Medicare Advantage program — administered by private insurers, including UnitedHealthcare — has grown in popularity over the past 15 years and now draws more members than traditional Medicare.

At the root of whistleblower lawsuits and investigations of Medicare Advantage programs are allegations that insurers like UnitedHealthcare have gamed the system to wrongly inflate the government payments they receive.

A 2024 report by the U.S. Department of Health and Human Services’ inspector general found UnitedHealth stood out from its peers in using questionable diagnosis data to boost Medicare Advantage payments.

The company disputed the federal auditors’ findings in the report, which echoed conclusions from an earlier contested study.

“Right now, Medicare Advantage is where a lot of the concerns are — both on [Capitol] Hill and in recent administrations — over fraud and upcoding,” Kemp said.

In a major civil case, the federal government in 2023 won a $170 million settlement with Cigna, the large Connecticut-based health insurer. The agreement resolved allegations that Cigna had violated federal law by submitting inaccurate and false diagnosis codes for Medicare Advantage enrollees.

As part of the settlement, Cigna signed a five-year “corporate integrity agreement” with the Department of Health and Human Services. It requires Cigna to conduct annual risk assessments, while an independent reviewer will do its own audits of the company’s risk-adjustment data.

Any fines, of course, hurt a company. But “given the massive windfall” from Medicare Advantage, Kemp said, some companies seem to believe settlement payments “are part of the cost of doing business.”

“The real is risk is if Congress gets involved,” he said, noting a growing bipartisan call for Medicare Advantage reform.

The government’s settlements with Cigna, Independent Health, Martin’s Point and Seoul Management all stem from whistleblower or “qui tam” lawsuits. Such cases are filed by employees, competitors or others familiar with the workings of an accused company.

The Justice Department can join whistleblower suits as a plaintiff but does so only in a minority of cases.

It did, however, in all four of those recent Medicare Advantage cases as well as a 2011 whistleblower suit filed against UnitedHealth Group by its former finance director, Benjamin Poehling.

However, Poehling and the Justice Department were dealt a major blow in March when a court-appointed special master concluded the lawsuit should not proceed.

The special master found the government lacked any evidence to support key elements of its case. UnitedHealth says it did nothing wrong.

Meanwhile, little is known about what the Justice Department is investigating at UnitedHealth in its new cases.

The Wall Street Journal first reported the probes, and the insurer’s acknowledgement was an about-face. After the Journal’s report this spring on the criminal investigation, UnitedHealth called the newspaper’s reporting “deeply irresponsible.”

In a different case, the Justice Department in 2020 filed a lawsuit against Indianapolis-based Anthem, alleging the insurer committed fraud by submitting inaccurate Medicare Advantage data to the government.

The company denied the charges and sought to have the suit dismissed. But a federal judge ruled in October 2022 that it could proceed. The case is pending.

Any Justice Department case against UnitedHealth resulting from the new investigations would also be prolonged.

“We think that any litigation that could result from the DOJ’s requests would be potentially lengthy and shaped by the outcome of the existing litigation and the Special Master’s report, making it challenging to handicap any real [financial] impact [on the company],” J.P. Morgan analyst Lisa Gill said in a research note Friday.