A Medicaid investigator alleges in a recently unsealed lawsuit that a firm hired by the state knowingly processed millions of dollars in fraudulent claims for Medicaid reimbursements and then fired her in retaliation for reporting her suspicions.
Karen Clark, an investigator who had worked for OptumHealth Behavioral Solutions, a subsidiary of UnitedHealth Group Inc., filed the federal lawsuit in April 2013 under the federal False Claims Act, alleging supervisors at OptumHealth looked the other way when nine behavioral health providers submitted false Medicaid claims over a 19-month period, and then they fired her for reporting the suspected fraud to law enforcement.
Clark claims OptumHealth profited from the alleged fraud because the state paid the firm 28 percent of each claim submitted for Medicaid reimbursement.
The lawsuit, unsealed last week, casts a new light on the state’s controversial decision in June 2013 to abruptly freeze Medicaid payments to 15 behavioral health care companies in the state after an audit raised concerns about potential Medicaid overbilling and fraud.
Two of the providers listed in the suit were among those targeted in the audit: the Southwest Counseling Center in Las Cruces and Santa Fe-based Presbyterian Medical Services. Presbyterian, whose juvenile treatment center in Farmington is named in the suit, struck a deal with the state in November 2013 in which it made no admission of wrongdoing but paid the state $4 million to keep its contract.
The Southwest Counseling Center, which was forced to close after its Medicaid payments were frozen, is one of 10 providers suing the state in federal court, saying it breached their contracts and violated their due process rights by refusing to release the audit or reveal the specific allegations against them.
State officials have said OptumHealth initially detected the potential fraud, and then the audit by a private Boston-based firm found “credible allegations” that the 15 behavioral health providers had overbilled Medicaid or had submitted fraudulent claims estimated at $36 million over three years. The allegations effectively shut down many of the organizations, which provided mental health services to low-income New Mexicans, but none has yet faced criminal charges. The state brought in Arizona firms to replace the New Mexico providers, causing a shake-up that sparked outrage among the behavioral health community and led to ongoing lawsuits against the state.
Clark’s allegations paint a picture of OptumHealth officials engaging in selective enforcement of Medicaid rules in the state by going after certain firms but not others. OptumHealth is no longer contracted with the state to administer the Medicaid program, though its parent company, UnitedHealth Group, is one of four managed care companies now responsible for overseeing Medicaid reimbursements.
Clark alleges OptumHealth ignored complaints about companies billing Medicaid for mental health services that they didn’t provide, services that were not medically necessary, services that were double-billed, services billed under the wrong codes in order to get higher reimbursements and services provided by unlicensed employees.
The lawsuit includes two counts of False Claims Act violations, one count of conspiracy to submit false claims, violations of New Mexico’s Fraud Against Taxpayers Act and whistleblower retaliation. She is asking for double back pay plus interest, compensation for special damages as a result of her termination, punitive damages, attorney fees, pre-judgment and post-judgment interest, and all litigation costs.
Clark’s suit names Minnesota-based insurance giant UnitedHealth Group; UnitedHealthcare insurance company, United Behavioral Health Inc. and OptumHealth New Mexico.
The defendants have not yet responded to Clark’s complaint in court. An OptumHealth spokesman did not return a request for comment Friday. Neither did a spokesman for the New Mexico Human Services Department, which is responsible for the state’s Medicaid program. Joshua Grabel, listed as UnitedHealthcare’s attorney in the case, said Friday that he has not been authorized to speak to the press.
In a motion filed July 9, 2015, the offices of New Mexico U.S. Attorney Damon Martinez and state Attorney General Hector Balderas said they would not intervene in the case. That could be beneficial for Clark — under the federal False Claims Act, if she wins her case, she would be entitled to a larger share of the money she alleges OptumHealth received fraudulently if state and federal law enforcement officials stay out of it.
Clark’s lawsuit details specific allegations of fraudulent Medicaid claims. In one case, she says, OptumHealth subcontracted with a firm to provide mental health care to inmates released on probation, such as anger management, substance abuse and sex abuse counseling. But probation officials complained that the firm wasn’t providing any services, the lawsuit claims, and OptumHealth officials ignored these complaints.
Clark says one hearing officer with the Probation and Parole Division told her the subcontractor “was not providing probationers with court mandated behavioral services.”
Clark also alleges that a worker who had claimed to provide mental health treatment to inmates on parole did not have a license to provide the services. And she says OptumHealth ignored claims that the subcontractor had billed Medicaid for mental health services for one probationer who had absconded and eventually was detained in another city.
Clark alleges OptumHealth reimbursed that subcontractor for at least $240,000 in false Medicaid claims over the nine months, and then pocketed 28 percent of that amount for processing the claims.
