United States ex rel. Silingo v. WellPoint, Inc., No. 16-56400 (9th Cir. 2018)
Annotate this CaseThe Ninth Circuit affirmed in part and reversed in part the dismissal of an action against Medicare Advantage organizations under the False Claims Act (FCA). Relator alleged that Medicare Advantage organizations retained MedXM to fraudulently increase, or at least maintain, their capitation payments for enrollees whose risk scores were set to expire and revert to the unadjusted Medicare beneficiary average. The panel held that relator has pleaded a wheel conspiracy-like fraud in which MedXM was the hub and defendants were the spokes. Therefore, the panel held that relator's charges of factually false claims, express false certifications, and false records should not have been dismissed due to her use of group allegations. The panel rejected defendants' contentions that the complaint failed to allege a sufficient factual basis to link MedXM's misconduct to defendants' actual submissions of claims or certifications to the Centers for Medicare and Medicaid Services, or that the complaint's allegations about the Medicare Advantage organizations' knowledge of the alleged fraud did not satisfy Rule 8. Finally, the panel affirmed the dismissal of a reverse false claim count, reversed dismissal on the pleadings of other counts, and remanded for further proceedings.
Court Description: False Claims Act The panel affirmed in part and reversed in part the district court’s dismissal of a False Claims Act suit against several Medicare Advantage organizations. Under Medicare Advantage’s “capitation” system, private health insurance organizations provide Medicare benefits in exchange for a fixed monthly fee per person enrolled in the program. These organizations pocket for themselves or pay out to their enrollees’ providers the UNITED STATES EX REL.SILINGO V. WELLPOINT 3 difference between their capitation revenue and their enrollees’ medical expenses. The Centers for Medicare and Medicaid Services sets capitation rates based on risk adjustment data, including enrollees’ medical diagnoses, reported by Medicare Advantage health insurance organizations. The plaintiff alleged that the defendant Medicare Advantage organizations retained Mobile Medical Examination Services, Inc. (MedXM) to fraudulently increase, or at least maintain, their capitation payments for enrollees whose risk scores were set to expire and revert to the unadjusted Medicare beneficiary average. The panel held that the district court erred in dismissing charges of factually false claims, express false certifications, and false records based on the plaintiff’s use of group allegations. The panel concluded that the plaintiff satisfied Federal Rule of Civil Procedure 9(b), which requires that the circumstances constituting fraud be stated with particularity, by pleading a wheel conspiracy-like fraud in which MedXM was the “hub” and the defendant Medicare Advantage organizations were “spokes” that largely engaged in the same conduct. The panel rejected the defendants’ argument that it should affirm the dismissal of the third amended complaint on the grounds that (1) the complaint failed to allege a sufficient factual basis to link MedXM’s misconduct to defendants’ actual submissions of claims or certifications to the Centers for Medicare and Medicaid Services; or (2) the complaint’s allegations about the Medicare Advantage organizations’ knowledge of the alleged fraud did not satisfy Rule 8. The panel affirmed the dismissal of a reverse false claim count that the plaintiff did not defend in response to 4 UNITED STATES EX REL. SILINGO V. WELLPOINT defendants’ motions to dismiss. The panel reversed the dismissal on the pleadings of other counts and remanded for further proceedings on the plaintiff’s causes of action for factually false claims, express false certifications, and false records.
The court issued a subsequent related opinion or order on September 11, 2018.
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