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The government lawsuit against Kaiser points to an immense fraud problem in Medicare

BY MICHAEL HILTZIK BUSINESS COLUMNIST

For the better part of a decade, a time bomb has been ticking at Oakland-based Kaiser Permanente — an accumulation of allegations that the giant health plan systematically defrauded Medicare by overstating the severity of its patients’ medical conditions.

On July 30, the bomb detonated. That’s when the Department of Justice joined six lawsuits filed by Kaiser employees since 2013 asserting that they witnessed the alleged fraud.

 

The government’s action instantly brought those lawsuits, which had been filed under seal in federal court in San Francisco, into the daylight. Taken together they allege wrongdoing on a stunning scale; plaintiffs’ lawyers involved in the cases say hundreds of millions of dollars in penalties and damage claims may be at stake.

 

At this stage, none of the allegations has been proved in court. Kaiser denies them, stating that it has been compliant with the rules governing Medicare claims and intends to “strongly defend against the lawsuits alleging otherwise.” It says it’s “disappointed the Department of Justice would pursue this path.”

 

Recently, the federal government has joined in private lawsuits against a host of major healthcare providers and health insurers.

“It’s industry-wide and it’s of major proportions,” says Mary Inman of Constantine Cannon, a law firm specializing in whistleblower cases, which numbers one of the Kaiser whistleblowers among its clients.

 

Inman says every major health insurance company has faced these allegations; a cottage industry has sprung up of firms purporting to help Medicare providers make “accurate” filings with the government but, in fact, showing them how to game government rules. “It’s not going away any time soon,” she says.

In recent years, the government has extracted settlements from several healthcare providers accused of exaggerating patient conditions to inflate Medicare Advantage fees, which are based partially on “risk scores,” assessments of the health of individual enrollees.

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