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DOJ Joins Whistleblower Lawsuit against Data Mining Company

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The U.S. Department of Justice (DOJ) has joined a whistleblower lawsuit against a New York health insurance company and a medical analytics company who has been accused of cheating the government out of millions of dollars. The lawsuit is the first of its kind in that it targets a data mining company.

DxID, a data company has been accused of helping Independent Health Association, a Buffalo, New York health insurance plan to defraud the government through overcharges on their Medicare Advantage plan. DxID, shut down in August but was owned by Independent Health Association. Founder and CEO of DxID, Betsy Gaffney, has also been named as a defendant in the lawsuit.

DxID False Claims Lawsuit Filed

The DOJ joins an existing lawsuit, filed in 2012. The whistleblower lawsuit was originally filed in 2012 under the False Claims Act, by Teresa Ross, a medical-coding employee. Ms. Ross worked at Group Health Cooperative in Seattle and filed the whistleblower lawsuit against her employer Group Health, DxID and Independent Health Association.

The lawsuit claimed that DxID was hired by Group Health in 2011 and acted to boost revenues by submitting false claims worth over $30 million to Medicare. Many of the claims were for new disease diagnosis which were not valid. One example cited in the lawsuit included a claim submitted for “major depression” even though the physician had described the patient as having a “sunny disposition”.

Group Health Cooperative is now known as Kaiser Foundation Health Plan of Washington but is unrelated to the Kaiser Family Foundation and Kaiser Health News.

DxID Accused of Data Mining for New Diagnoses

In the initial filing, Group Health denied wrongdoing but settled the case by paying $6.3 million. The DOJ has taken over the case but has targeted DxID for its activity with both Group Health and Independent Health. In addition to False Claims submitted for Group Health between 2010 and 2012, DxID also submitted unsupported medical claim codes for Independent Health between 2010 and 2017.

DxID is accused of marketing its services as revenue-generating tools which were provided free of charge unless claims were paid. The DOJ has named the DxID CEO Gaffney as a plaintiff for her part in marketing services which were “too attractive to pass up”.

The DOJ complaint describes DxID processes as “trolling” for patient medical records to locate key words and identify cases where new conditions could be coded. The information came from non-diagnosed, potentially false situations which were either exaggerated, had been resolved, or were completely unsupported by medical records.

Medicare Advantage May Be Target for Fraud

Medicare Advantage is popular amongst seniors but appears to be rife for fraudulent claims. The plans offer enrollees better coverage, lower fees or more services but rely on a capitation where the insurance company gets a certain amount of money, no matter what services are required. Insurance companies are awarded bigger capitation payments for sicker patients. This may give insurance companies an incentive to make patients seem sicker than they are.

One industry analysis estimates that improper payments to Medicare Advantage plans may top $16 billion annually. Twenty or more whistleblower lawsuits have been filed over insurance companied manipulating risk assessments to increase revenue from Medicare Advantage payments. Earlier in September, another Medicare Advantage false claims lawsuit resulted in a $90 Million settlement.

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