Whistleblower lawsuit accuses Humana of billing fraud in Florida, says misleading data in medical records put patients at risk

By Fred Schulte

Center for Public Integrity

Louisville-based Humana Inc., which operates some of the nation’s largest private Medicare health plans, knew for years of billing fraud at some South Florida clinics, but did little to curb the practice even though it could harm patients, a doctor alleges in a newly unsealed whistleblower lawsuit.

The suit was filed by South Florida physician Mario M. Baez. It accuses Humana and his former business partner, Dr. Isaac K. Thompson, of engaging in a lucrative billing fraud scheme that lasted years. The suit also names three other Palm Beach County doctors, two medical clinics and a doctors’ practice group as defendants. The suit was filed in October 2012, but remained under a federal court seal until Feb. 26.

Humana had no comment. “As a matter of long-standing company policy, Humana does not comment on pending litigation,” said company spokesman Tom Noland.

Thompson, a Delray Beach doctor, was indicted early last year on health care fraud charges stemming from similar allegations. He had pleaded not guilty, but last week indicated he would change his plea, and was to appear in federal court in Fort Lauderdale on Friday, March 4.

The Baez case is likely to bring fresh scrutiny to Humana, which has more than 3 million elderly patients in its Medicare Advantage plans nationwide. That business was a major incentive for Aetna Inc. to buy Humana, a purchase still pending regulatory approval. Aetna says the merged company's government-related business will be based in Louisville.

The Baez suit targets a billing formula called a risk score, which is designed to pay Medicare health plans higher rates for sicker patients and less for people in good health. But overspending tied to inflated risk scores has cost taxpayers tens of billions of dollars in recent years, as the Center for Public Integrity reported in a series of articles published in 2014.

Federal officials have struggled for years to stamp out these overcharges, known in health-care circles as “upcoding,” while at least a half-dozen whistleblowers have filed lawsuits accusing Medicare Advantage plans of ripping off the government.

Baez’s case adds a new wrinkle because it alleges that inflating risks scores not only wastes taxpayer dollars, but can also cause a patient to be harmed by improper medical treatment.

Baez said in a letter to the judge in the case, U.S. District Judge Kenneth A. Marra, that treating elderly patients with “multiple ailments” is difficult when you have accurate data, but “when medical records are poisoned with misleading data [from inflated risk scores] it becomes Russian roulette.” Patients aren’t told their risk score and aren’t likely to know if a doctor has exaggerated how sick they are or added bogus medical conditions to their medical records to boost profits, Baez said.

Doctors use a series of billing codes to document patients’ health, including any diseases they have and how severe they are. Medicare Advantage plans report these codes to the government, which calculates a patient risk score and sends off a payment to the health plan.

In Thompson’s case, Humana paid 80 percent of the money it received to the doctor and kept the rest. Prosecutors charged that fraudulent diagnoses submitted by Thompson between January 2006 and June 2013 generated overpayments of $4.8 million.

Baez alleges that Humana encouraged overbilling by providing affiliated doctors with forms that highlighted “more profitable” diagnosis codes they could use for patients. Many were statistically impossible to support, according to the suit, which cited allegedly inflated risk scores in more than three dozen patients.

Humana has acknowledged being the target of investigations into its billing practices, including some involving whistleblowers. So has another large Medicare Advantage plan operated by UnitedHealth Group. Last month, UnitedHealth said it was cooperating with a Department of Justice review of its billing practices, according to a Securities and Exchange Commission filing.

Court filings unsealed in the Baez case confirm that the company faces several similar whistleblower suits, including at least one that remains under court seal. The court records also suggest that the criminal fraud investigation that snared Thompson is not over.


“There are some components of the criminal investigation which remain active,” Assistant U.S. Attorney Mark A. Lavine wrote in a December 2015 court filing. Lavine added that the investigation “continues to move forward aggressively.” Lavine also indicated that two other whistleblower cases have been filed against Humana “in connection with similar allegations at other clinics.”

This story is co-published with NPR. It is part of a series, Medicare Advantage Money Grab.