January 8, 2016

Lawsuit: $14 million in new Medicaid fraud ignored in botched behavioral health audits

A former investigator for one of the country’s biggest health managed care providers is accusing that company of profiting from turning a blind eye to fraud against the state.

Health MoneyKaren Clark, who worked as a senior investigator for a branch of UnitedHealth Group from October 2011 through April 2012, filed a lawsuit accusing Optum Behavioral Health Solutions of giving Medicaid payments to reimburse nearly $14 million in false claims by nine health providers. Clark also alleges that OptumHealth took home 28 percent of the wrongly reimbursed Medicaid claims.

OptumHealth is the subsidiary of UnitedHealth that manages New Mexico’s Medicaid dollars.

Clark faults OptumHealth of never having a proper system in place to perform her chief task—catching Medicaid fraud.

“Optum was not set up to detect the fraud claims submitted by providers,” Clark’s attorney, Maureen Sanders, told NM Political Report.

When Clark nevertheless found and reported fraud to her superiors, she alleges they told her to back off, in some cases because of a certain health provider’s connections. When she found that Carlsbad Mental Health Center had submitted payments for Medicaid services it never provided, Clark alleges an OptumHealth higher-up told her not to “irritate” the head of the Carlsbad Center because “he’s politically connected and cause harm to us.”

The suit says OptumHealth conducted an investigation against and fired Clark for her reports of fraud to her superiors.

Clark’s lawsuit claims that the Carlsbad Center reaped $9.56 million in Medicaid from false claims between July 2010 and October 2011.

Similarly, Clark’s lawsuit says she couldn’t complete of her superiors told her to drop investigations at the following providers:

—Southwest Counseling Center, accused of being overpaid $1.7 million from false documents and OptumHealth superior accused of telling Clark “don’t worry.”

—New Mexico Psychiatric Services, which allegedly asked for and OptumHealth granted $1.2 million in false Medicaid reimbursement.

—Presbyterian Medical Services, which allegedly took $350,000 in false Medicaid claims that OptumHealth approved by discharging some patients too quickly and keeping others much longer than clinically warranted.

—Ann Morrow and Associations, from which patients complained claiming they weren’t getting services for which, along with other things, Medicaid allegedly paid $328,000.

—Family Connections, allegedly billed Medicaid $240,000 in false claims, one of which included an employee billing between 18 and 26 hours of treatment each day.

—Gerard Weideman dba Studio Best, who allegedly billed Medicaid in $203,000 in false claims related to services conducted by unlicensed providers.

—Dr. Cynthia King, who allegedly overused a code to bill Medicaid and got $100,000 in false claims.

—Covenant Child, which allegedly got $86,000 from errors and was even willing to pay back the difference.

“The public should be concerned that OptumHealth promised to monitor these claims,” Sanders said.

OptumHealth, of course has been under controversy in New Mexico since 2013 for its role in the state’s behavioral health shakeup. That year, OptumHealth infamously got the ball rolling on fraud allegations against 15 different New Mexico clinics that specialized in behavioral health. An audit by Boston-based Public Consulting looked at a sample and extrapolated that the 15 providers had frauded $36 million from Medicaid.

This was enough for Gov. Susana Martinez’ administration, which took campaign contributions from UnitedHealth, to call those findings “credible allegations” of fraud.

Her Human Services Department then controversially shut down the 15 providers by cutting Medicaid funding off and replaced them with Arizona-based providers. The 15 New Mexico providers claimed they were robbed of due process and the state attorney general has since cleared at least two from wrongdoing.

Clark’s suit, which she filed back in 2013 but wasn’t unsealed until recently, points to yet more dysfunction in how OptumHealth audits Medicaid providers.Clark filed her suit under the False Claims Act, which allows her to sue OptumHealth on behalf of state government. Because the Clark’s allegations involve fraud of taxpayer dollars, Sanders initially went to the New Mexico Attorney General and the U.S. Attorney of New Mexico, who both eventually decided not to pursue the case against OptumHealth.

“We are disappointed that Attorney General and U.S. Attorney decided not to intervene in this case after having it for two years,” Sanders said.

A spokesman for Attorney General Hector Balderas said the office saw it best to not pursue the case.

“The Office of the Attorney General cannot compromise continuing litigation by discussing intervention and declination decisions,” Attorney General’s Office spokesman James Hallinan said in a statement email to NM Political Report. “However, based on its investigation, the Office of the Attorney General determined it would be in the best interest of the State to decline to intervene in the case.”

Clark’s case was unsealed once the state decided not to intervene.

OptumHealth declined to comment for this story.

Clark is suing for damages under the federal False Claims Act, the state Fraud Against Taxpayers Act and the state Whistleblower Protection Act. She’s asking the court for double back pay, attorney fees and punitive damage, among others.

Update: Statement from AG’s office added.

Read the lawsuit below:

Dkt-1 Complaint With Civil Cover Sheet by New Mexico Political Report