United States ex rel. Clark v. Unitedhealth Grp., Inc.

UNITED STATES OF AMERICA ex rel. KAREN CLARK,and STATE OF NEW MEXICO ex rel. KAREN CLARK,and KAREN CLARK, individually, Plaintiffs, v. UNITEDHEALTH GROUP, INC., UNITED HEALTHCARE INSURANCE COMPANY,UNITED BEHAVIORAL HEALTH, INC., and OPTUMHEALTH NEW MEXICO, Defendants.

Civ. No. 13-00372 MV/CG

UNITED STATES DISTRICT COURT DISTRICT OF NEW MEXICO

September 22, 2016

MEMORANDUM OPINION AND ORDER

THIS MATTER comes before the Court on the Motion of Defendants UnitedHealth Group, Inc., United Healthcare Insurance Company, United Behavioral Health, Inc., and OptumHealth New Mexico ("Defendants") to Dismiss the Complaint with Prejudice and Memorandum in Support, filed January 22, 2016 [Doc. 32]. The Court, having considered the motion, briefs, relevant law, and being otherwise fully informed, finds that the motion is well taken and will be granted.¹

BACKGROUND

Defendant UnitedHealth Group, Inc. provides "managed health care through various subsidiaries, operating companies, and joint ventures including Defendant United Healthcare Insurance Company, Defendant United Behavioral Health, and Defendant OptumHealth NewMexico [(OHNM)]." Id. ¶ 5. Beginning in January 2009, Defendants had a contract with the State of New Mexico Interagency Behavioral Health Purchasing Collaborative ("the Collaborative"), obligating Defendants to provide behavioral health services to New Mexico residents. Id. ¶ 9. The Collaborative is made up of a series of New Mexico State agencies. Id. ¶ 10. The contract between Defendants and the Collaborative authorized Defendants to provide behavioral health services through subcontracted service providers, id. ¶ 12, subjected all services provided under the contract to all applicable federal and New Mexico statutes and regulations, id. ¶¶ 11, 13, and required Defendants to monitor subcontractors in order to ensure compliance, id. ¶¶ 13-14, 16.

From October 10, 2011 through April 9, 2012, Relator/qui tam Plaintiff Karen Clark ("Relator") was employed by Defendant UnitedHealth Group, Inc., as a Senior Investigator within the Special Investigations Unit (SIU) of UnitedHealth Group Inc.'s Optum Behavioral Health Solutions (OHBS). Doc. 1 ¶ 4. The SIU "conducted investigations of allegations of fraud and abuse for and on behalf of Defendant OptumHealth New Mexico and other OptumHealth businesses within the United States of America." Id.

"All of the behavioral services which the Defendants and its subcontractors were responsible for providing under the contract were paid for by the Medicaid program administered by the New Mexico Human Services Department, and other federal and state funding sources." Id. ¶ 17. Medicaid is a federally assisted grant program that enables states to provide medical assistance and related services, including behavioral health services, to individuals with limited resources. "Under the Medicaid program, the State directly reimburses providers of behavioral health services for services actually rendered, with the State obtaining the federal share of the payment from accounts which draw on funds of the United States Treasury." Id. ¶ 19. "Inorder to receive Medicaid funds, enrolled providers, together with authorized agents, employees, and contractors, are required to abide by all the provisions of the Social Security Act, the regulations promulgated under the Act, and all applicable policies and procedures issued by the State of New Mexico." Id. ¶ 20. "[F]alse claims for payment made on the New Mexico Medicaid program . . . cause false claims for payment of federal funds to be presented to an officer or employee of the federal government." Id. ¶ 21.

Relator claims that Defendants "billed the Medicaid program, and other programs funded by the federal and state government for behavioral health care and treatment which was not appropriately documented, documented by falsified records, provided by unlicensed providers, not medically necessary, billed using inapplicable and improper billing codes, and which was not, in fact, provided." Id. ¶ 30; see also id. ¶ 38. The Complaint lays out in detail allegations of fraud perpetrated by nine of Defendants' subcontractors. Id. ¶¶ 39-160.

Relator alleges that "[a]t all material times, the Defendants knew that the claims for payment they were submitting to the Medicaid and other government funded programs and for which it was issuing payment to its above-named subcontractors were false . . . and that its subcontractors were not eligible to be reimbursed for those claims . . . which Defendants were responsible for administering on behalf of the State of New Mexico under its contract." Id. ¶ 36. Nevertheless, the Complaint alleges that Defendants falsely certified in its requests for Medicaid reimbursements that its subcontractors were licensed or otherwise eligible for reimbursement, that Defendants had a functional edit system in place to identify claims that were not eligible for Medicaid reimbursement or were suspicious, that all claims submitted were accurate, within federal guidelines, and accurately reflected the care actually provided. Id. ¶ 164.

Relator alleges that because Defendants received twenty eight percent of every claim that was reimbursed for services provided by its subcontractors, Defendants had an economic incentive to pay or seek reimbursement, and to not deny these claims. Id. ¶ 32. The Complaint alleges that from October 1, 2011 until the filing of the Complaint on April 22, 2013, Defendant OHNM received and paid out to their subcontractors a total of approximately $529.5 million dollars in Medicaid funds. Id. ¶¶ 183-85.²

As a Senior Investigator, Relator's role was to investigate reports or complaints of false claims on the part of subcontracted service providers. Id. ¶ 4. Regarding several of the subcontractors mentioned in the Complaint, Relator alleges that she was instructed by her superiors to stop pursuing the investigation. See id. ¶¶ 43, 59, 73, 95, 156. The Complaint further alleges that Defendants continued to process claims for payments submitted by these subcontractors. Id. ¶¶ 46, 49, 75, 85, 89, 96, 109-111, 113, 123, 133, 142.

Relator claims that Defendants made efforts to conceal the non-compliance of their subcontractors, including "failing to respond to requests from the New Mexico Attorney General's office for an accounting review of [a particular] subcontractor's claims." Id. ¶ 52; see also id. ¶¶ 97, 114-15 (instructing Relator not to communicate with government officials). Relator further alleges that in two instances her superiors were aware of false claims being submitted by subcontractors. See id. ¶ 95 (alleging that the Chief Operating Officer of OHNM "admitted she was aware [the subcontractor] was submitting false claim[s] but that OHNM couldnot go against [this subcontractor] because it would cause problems for OHNM with the State of New Mexico . . ."), 121-22. Relator also claims that Defendants were aware of defects in their automated monitoring system. See ¶ 90 (alleging that when Relator confronted the Chief Operating Officer of OHNM about calls received on the OHNM fraud/abuse tipline reporting false claims, she was informed that because the subcontractor "was 'a big player in the state', that OHNM already had problems with the State because its claims edit system . . . and that OHNM did not want to draw attention to themselves by going after a big provider."), 121-22 (alleging that after a subcontractor offered to pay OHNM back the difference between what it should have received and what it received using false claims, Relator "was instructed by OHNM's [Chief Operating Officer] not to report this finding to the State of New Mexico because if these claims were reported, the State would learn that OHNM's edit system did not work properly.").

Finally, Relator claims that she reported the findings of some of her investigations to governmental authorities, and that Defendants retaliated against her in response. See, e.g., Doc. 1 ¶¶ 71, 95, 149. In one instance Relator was "verbally reprimanded" by her superiors in the SIU after reporting information regarding one subcontractor's submission of false claims to OHNM and the State of New Mexico. Id. ¶¶ 71-72. In another instance Relator forwarded complaints from a subcontractor's employees to the New Mexico Attorney General's Office and then began an investigation of the complaints. Id. ¶ 149. Three days after beginning her investigation, the SIU Director informed Relator "that she was under investigation, to stop work on her investigation of this provider, and to not speak with anyone regarding her investigation. [She] was further informed that if she did speak with anyone about [this subcontractor] she would be fired by OHNM." Id. ¶ 156. Relator was later contacted by the New MexicoAttorney General's Office regarding the subcontractor, and Relator was told by the SIU Director not to return those calls. Id. ¶ 158. A few days later, Relator was terminated. Id. ¶ 159.

Relator brings this action under the False Claims Act ("FCA") 31 U.S.C. §§ 3729 et seq. on behalf of the United States, as well as under the New Mexico Fraud Against Taxpayers Act ("FATA") N.M.S.A. §§ 44-9-1 2007 et seq. on behalf of the State of New Mexico. Count I under Section 3729(a)(1)(A) of the FCA and the second Count III³ under Section 44-9-3.A(1), (2), and (3) of the FATA are based on the allegations that Defendants knew the claims submitted by its subcontractors were false but nevertheless "accepted, processed and paid those claims from Medicaid funds and funds obtained from other government funding sources." Id. ¶ 171-72; 196-97. Count II under Section 3729(a)(1), (2), and (3) of the FCA claims that Defendants "presented false claims to the federal and state government when they falsely certified that they and all of their subcontractors were in compliance with Medicaid and federal grant guidelines and that its edit system was functional and working properly." Id. ¶ 181. The...