Seoul Medical Group Inc., along with its subsidiary Advanced Medical Management Inc., based in California, has reached a settlement agreement worth $58,740,000 in a case involving allegations of submitting false claims under the False Claims Act.
The company’s former president, Dr. Min Young Cha, also agreed to pay $1,760,000 as part of the resolution.
These settlements come after claims surfaced that they had submitted inaccurate diagnosis codes for two spinal conditions in order to boost payments from the Medicare Advantage (MA) program.
Additionally, Renaissance Imaging Medical Associates Inc., a radiology group from California, is paying $2,350,000 for allegedly participating in this fraudulent activity.
Understanding the Medicare Advantage Program
Medicare Advantage, also called Medicare Part C, offers Medicare beneficiaries an option to enroll in private managed care insurance plans.
These MA Plans contract with healthcare providers like Seoul Medical Group to provide Medicare-covered services.
Payments to these plans are made based on a per-person amount, with adjustments made by the Centers for Medicare and Medicaid Services (CMS) using a system called risk scores.
The higher the risk score, the higher the payment for the healthcare provider.
This system aims to account for more costly medical conditions, but the case against Seoul Medical Group involves accusations of submitting false diagnoses to artificially increase these payments.
The Alleged Scheme
The alleged fraudulent activity took place between 2015 and 2021.
Seoul Medical Group, led by Dr. Cha, reportedly submitted false diagnoses for two severe spinal conditions—spinal enthesopathy and sacroiliitis—for patients who did not actually suffer from these conditions.
The situation escalated when the company, questioned by an MA Plan about their use of spinal enthesopathy, sought help from Renaissance Imaging Medical Associates to create radiology reports that would support the false diagnoses.
These actions resulted in higher payments from CMS to the MA Plan, which then passed a portion of those increased payments to Seoul Medical Group.
Government’s Strong Message on Healthcare Fraud
Acting Assistant Attorney General Yaakov M. Roth from the Justice Department’s Civil Division emphasized the significance of truthful reporting in Medicare Advantage, stating, “The United States will zealously pursue appropriate action against those who knowingly submit false claims for taxpayer funds.”
The case is a reminder of the government’s dedication to holding healthcare providers accountable for fraudulent activities.
Acting U.S. Attorney Joseph T. McNally for the Central District of California also reiterated the commitment to fighting unlawful misrepresentation in healthcare programs, highlighting the diligent efforts to prevent government program fraud.
Christian J. Schrank, Deputy Inspector General for Investigations at HHS-OIG, noted that providers who manipulate the system undermine patient trust and the foundation of care in the U.S. healthcare system.
The Role of Whistleblower Paul Pew
The civil settlement is a result of a whistleblower case filed by Paul Pew, the former Vice President and CFO of Advanced Medical Management.
Under the False Claims Act’s qui tam provisions, private individuals can bring forward claims on behalf of the government and receive a portion of any recovery.
While the exact amount Pew will receive from this settlement has not been determined, his role was instrumental in uncovering the fraud.
A Coordinated Effort to Combat Healthcare Fraud
The settlement was the result of collaboration between the Justice Department’s Civil Division, the U.S. Attorney’s Office for the Central District of California, and the Department of HHS-OIG.
It serves as another example of the government’s focus on combating healthcare fraud, with the False Claims Act remaining a crucial tool in these efforts.
A Broader Impact on Healthcare Fraud Prevention
The investigation and subsequent resolution of this case underscore the government’s determination to tackle fraud in the healthcare system.
Individuals who suspect fraud or abuse within healthcare programs are encouraged to report it to the Department of Health and Human Services at 800-HHS-TIPS (800-447-8477).
It’s important to note that while a settlement has been reached, the claims made in the case are allegations only, and no determination of liability has been made.