Owners of Medicare Advantage plan pay $22.6 million to settle False Claims Act charges

by Ben Vernia | November 25th, 2010

On November 24, the Department of Justice announced that the owners of a Medicare Advantage plan and its primary care provider have settled False Claims Act allegations that they used false diagnosis codes. The owners and provider agreed to pay $22.6 million after the government froze $20 million in assets. According to DOJ’s press release:

Dr. Walter Janke, his wife, Lalita Janke, and Vero Beach, Fla.-based Medical Resources L.L.C. (MR) have agreed to pay $22.6 million to resolve allegations that they caused Medicare to pay inflated amounts based upon the submission of false diagnosis codes, the Justice Department announced today.

The Jankes were the owners of America’s Health Choice Medical Plans Inc. (AHC), a Medicare Advantage Organization (MAO), approved by the federal health care program to provide health care to enrolled Medicare beneficiaries. The Jankes also owned MR, AHC’s primary care provider. AHC and MR are no longer doing business.

The agreement resolves a lawsuit brought by the United States in the U.S. District Court for the Southern District of Florida alleging that the Jankes and MR violated the False Claims Act by causing AHC to falsely increase the severity of beneficiary diagnoses to obtain higher Medicare payments. Under the Medicare Advantage Program, MAO’s are paid more to provide services for members with serious and/or chronic medical conditions then they are for relatively healthy members.

In addition to suing the Jankes and MR, the United States successfully petitioned the court to freeze approximately $20 million of the Janke’s assets believed to be the proceeds of their unlawful scheme. A portion of the Janke’s frozen assets, along with monies resulting from the dissolution of AHC now held in receivership by the Florida Department of Financial Services, will be used to pay the settlement.

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