Sutter Health files motion to dismiss, criticising DOJ's outdated False Claims Act theories in Medicare Advantage case

Introduction
Sutter's motion
Comment

Introduction

On 14 June 2019 Sutter Health filed a motion to dismiss the Department of Justice's (DOJ's) complaint in intervention in a False Claims Act suit alleging that Sutter had knowingly submitted and caused the submission of unsupported diagnoses codes for Medicare Advantage patients in order to inflate Medicare reimbursements.(1) The DOJ filed its complaint in intervention on 4 March 2019 (for further details please see "DOJ files complaint in intervention in Medicare Advantage case against Sutter Health").

Sutter's motion

Sutter's motion sought an order to dismiss the government's complaint in its entirety for failure to state a claim as required by Federal Rules Civil Procedure 12(b)(6). Specifically, Sutter contended that the government had failed to:

• allege false claims or had unlawfully retained overpayments under Medicare Advantage's comparative standard;
• allege with particularity that Sutter had identified any overpayments or had knowingly submitted false claims or statements; and
• allege with particularity that any falsity in Sutter's certifications would have been material to the government's decision to pay.

Sutter's motion primarily relies on the District Court for the District of Columbia's decision in UnitedHealthcare Insurance Co v Azar,(2) which vacated a portion of the Centres for Medicare and Medicaid Services' 2014 final overpayment rule applicable to the Medicare Advantage programme (for further information please see "Court vacates Medicare Advantage overpayment rule and curtails DOJ's pursuit of False Claims Act damages"). Citing Azar, Sutter argued that:

• the government's case "rests on an outdated conception of the Medicare Advantage program that federal courts have repeatedly rejected"; and
• the government has mistakenly tried to "wedge its Medicare Advantage case into the traditional Medicare framework".

According to Sutter's motion, the government must allege "more than just erroneous diagnosis codes to show that Defendants were overpaid" and "that the prevalence of unsupported diagnosis codes in Defendants' Medicare Advantage submissions exceeds the prevalence of such codes in traditional Medicare".

According to the motion, the DOJ's complaint in intervention "does not and cannot make that essential allegation".

Relying on recent decisions in United States ex rel Poehling v UnitedHealth Group, Inc,(3) and United States ex rel Swoben v Scan Health Plan,(4) Sutter further argued that the government had failed to make "other key allegations" regarding whether Sutter had knowingly violated the law and whether any alleged false certifications had actually been material to the government's payment decisions.

Comment

Sutter's motion reflects the industry's continued resistance to the DOJ's enforcement under the False Claims Act on the basis of potentially unsupported diagnoses codes for Medicare Advantage beneficiaries, without more evidence.

For further information on this topic please contact Jaime L M Jones at Sidley Austin LLP's Chicago office by telephone (+1 312 853 7000) or email (jaime.jones@sidley.com). Alternatively, contact Jennifer M Haney at Sidley Austin LLP's Washington DC office by telephone (+1 202 736 8000) or email (jhaney01@sidley.com). The Sidley Austin LLP website can be accessed at www.sidley.com.

Endnotes

(1) A copy of Sutter's Motion is available here.

(2) 330 F Supp 3d 173 (DDC 2018).

(3) CV 16-08697, 2018 WL 1363487 (CD Cal 2 February 2018).

(4) CV 09-5013, 2017 WL 4564722 (CD Cal 5 October 2017).