By the Constantine Cannon Whistleblower Team

On March 26, California-based Seoul Medical Group Inc. and its subsidiary Advanced Medical Management agreed to pay $58,740,000 to settle Department of Justice (DOJ) and whistleblower charges they violated the False Claims Act by bilking the Medicare Advantage program out of millions of dollars through false diagnoses of their patients.  Seoul Medical’s former founder Dr. Min Young Cha and Renaissance Imaging Medical Associates also agreed to pay $1,760,000 and $2,350,000, respectively, for their involvement in the alleged scheme.

Under Medicare Advantage (also known as Medicare Part C), the government pays private health insurance companies (known as MA Plans) to provide health insurance coverage to individual beneficiaries.  These MA Plans operate under a managed care model with the Centers for Medicare and Medicaid Services (CMS) paying them a monthly per-member rate regardless of the medical treatments and services they provide their patients.

To account for patients’ varying levels of health and medical needs, CMS makes additional “risk adjustment” payments to the MA plans based on their patients’ physical condition and the likely treatment they will need.  The nature of this capitated payment model encourages some MA plans — along with the healthcare providers and other companies working with them — to exaggerate the risk profile of patients to secure higher risk adjustment scores and thus higher reimbursement payments from CMS.  That is exactly what the government found Seoul Medical did here with respect to the two spinal conditions, spinal enthesopathy and sacroiliitis.

According to the government, Seoul Medical Group and Dr. Cha submitted diagnoses for these serious spinal conditions for patients who did not have either of those conditions.  When an MA plan questioned Seoul Medical on the enthesopathy diagnoses, Seoul Medical got Renaissance Imaging to create radiology reports to support these allegedly false diagnoses.  Providing these diagnoses raised the risk adjustment scores for these patients, resulting in CMS providing higher reimbursement to the MA Plan, which then passed on a portion of the increased payment to Seoul Medical.

Medicare Advantage Fraud

This type of Medicare Advantage fraud (also called risk adjustment fraud) has become prevalent in recent years as more and more individuals have signed on to the Medicare Advantage program.  That is why going after Medicare Advantage fraud has become one of DOJ’s top enforcement priorities.  Indeed, DOJ highlighted this enforcement area in its 2024 False Claims Act Roundup, stressing it is an area of “critical importance” because it has grown to represent the largest component of Medicare in terms of federal dollars spent and number of beneficiaries impacted.

Constantine Cannon whistleblower partner Gordon Schnell pointed to this latest settlement as a demonstration of DOJ’s continued commitment to stopping Medicare Advantage fraud.  According to Schnell, “DOJ is definitely operating under a new set of enforcement priorities these days, but this settlement shows going after risk adjustment fraud remains high up on DOJ’s fraud enforcement hit list.”

DOJ acknowledged as much in announcing this most recent settlement, making it clear it was hoping to send a message to the healthcare industry to be honest and accurate in their Medicare Advantage billing.  Or else.  As DOJ Acting Civil Chief Yaakov Roth stated: “Medicare Advantage is a vital program for our seniors and the government expects healthcare providers who participate in the program to provide truthful and accurate information.  Today’s result sends a clear message to the Medicare Advantage community that the United States will zealously pursue appropriate action against those who knowingly submit false claims for taxpayer funds.”

As with most False Claims Act cases, especially with healthcare related frauds, this enforcement action originated with a whistleblower lawsuit filed under the qui tam provisions of the False Claims Act.  These provisions allow private parties to file lawsuits on behalf of the government against those who commit fraud against the government.  In return, successful whistleblowers can receive up to 30% of the government’s recovery.

Our Firm Helps Medicare Advantage Fraud Whistleblowers

Constantine Cannon has substantial experience representing Medicare Advantage whistleblowers and has secured several successful settlements in this area, including most recently a $98 million settlement against Buffalo-based Independent Health and a $90 million settlement against San Francisco-based Sutter Health.

Contact us to learn more about our work in this area or if you have information on potential Medicare Advantage fraud.  We will connect you with an experienced member of the Constantine Cannon whistleblower team for a free and confidential consult.

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Office of Public Affairs, Department of Justice Press Release

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