May 22, 2017

May 22, 2017

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Whistleblower Set to Receive More than $10.5 Million of $54 Million Settlement for Exposing Former Employer CareCore National, LLC’s Prior Authorization Insurance Claims Scheme

Medical management company CareCore National, LLC recently entered into a settlement agreement to resolve allegations that the company engaged in a scheme that resulted in hundreds of thousands of false insurance claims being submitted to the government for payment. In particular, the lawsuit alleges that CareCore designed and implemented a program that resulted in the automatic approval of prior authorization requests for medical services that were not always medically necessary. Hundreds of thousands of requests were “approved” for medical services that were performed for Medicare and Medicaid beneficiaries, resulting in these programs overbilling the government for unnecessary medical services. The company has agreed to settle the lawsuit for $54 million.

CareCore was founded in 1994 and functions as a medical benefit management company that specializes in consulting services that reduce costs and improve the quality of health care. CareCore was adopted under the eviCore healthcare umbrella in 2015 after having previously merged with MedSolutions, Inc. in 2014. The company’s clients include managed care organizations (MCOs) and insurance providers.

The qui tam lawsuit was filed by John Miller, who was previously employed as a Licensed Practical Nurse at CareCore. One of Mr. Miller’s responsibilities was that of a Clinical Reviewer who was tasked with assessing whether prior authorizations for medical procedures met the criteria for approval, and thus, the claim could be submitted to insurance companies for payment.

Within the Complaint that the United States filed following their decision to intervene in the case, the US alleges that CareCore experienced significant time constraints in processing the high number of prior authorization requests that they received from their clients. In response to this demand, the company adopted a corporate strategy known as the Process As Directed (PAD) program. Within this program, Clinical Reviewers automatically approved prior authorization requests without objectively evaluating the medical necessity of the procedures in an attempt to maintain the contractual obligations that the company had to process a certain number of requests within a designated time frame.

The Complaint contends that, between 2005 and 2013, CareCore deceptively authorized over 200,000 prior authorizations using the PAD system. The lawsuit’s government programs fraud allegations are related to CareCore’s MCO clients, whose patients include Medicaid and Medicare beneficiaries. Due to CareCore’s padding scheme, MCOs were led to believe that medically unnecessary services were accurately approved by CareCore, which resulted in these health care providers submitting false claims to the government for payment for these services.

For his participation as a relator, or whistleblower, within the case, Miller is set to receive upwards of $10.5 million. Such high rewards are not uncommon for individuals who file qui tam lawsuits on behalf of the federal government. 

© 2017 by Tycko & Zavareei LLP

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About this Author

Jonathan K. Tycko leads the Whistleblower Practice Group of Tycko & Zavareei LLP

In recent years, the laws of the United States have undergone a whistleblower revolution. Federal and state governments now offer substantial monetary awards to individuals who come forward with information about fraud on government programs, tax fraud, securities fraud, and fraud involving the banking industry. Whistleblowers also now have important legal protections, designed to prevent retaliation and blacklisting.

The law firm of Tycko & Zavareei LLP works on the cutting edge of this whistleblower revolution, taking on even the most complex and confidential whistleblower...

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