False Claims Act Applies to Medicare Advantage Plans that Provide False Cost Estimates

The Ninth Circuit recently joined the First and Fourth Circuits in holding that knowingly false estimates can trigger FCA liability. Specifically, in United States ex rel. Hooper v. Lockheed Martin Corp., No. 11-5527(9th Cir. Aug. 2, 2012), the Court held that false estimates can trigger FCA liability when the defendant knows the estimates are false when submitted. While this decision was not a healthcare FCA case, it has immediate implications for government health care programs, especially Medicare Part C.

Pursuant to Medicare Part C, “Medicare Advantage” plans provide services directly to beneficiaries, through arrangements with contracted providers, or by purchasing services from non-contracted providers.  These contracted plans are paid a capitated rate per enrollee – that is, a set amount of money based on the anticipated expenses, enrollees’ risk factors and other characteristics.

When a Medicare Advantage plan provides false cost estimates to CMS, it artificially inflates the capitated payments in subsequent years. Thus, under the recent Ninth Circuit case law, FCA liability would apply when the plan knowingly provides the false estimates to CMS.

More information for whistleblowers is located at the Nolan & Auerbach, P.A. website.