U.S. drops lawsuit against UnitedHealth after losing court ruling

The U.S. government dropped a lawsuit accusing UnitedHealth Group Inc of submitting false claims to get inflated Medicare payouts, a court filing on Thursday showed, a week after a judge dismissed the complaint but said it could be amended.

U.S. District Judge John Walter in Los Angeles ruled that the lawsuit failed to identify any UnitedHealth officers who signed documents vouching for data submitted to the Medicare Advantage programme, or to claim that any of them knew they were signing off on false information.

"We are pleased with the government`s decision to dismiss these meritless claims," said UnitedHealth spokesman Matt Burns in a statement.

The U.S. Department of Justice, which filed the lawsuit, declined to comment. A second lawsuit by the government, accusing UnitedHealth of obtaining over $1 billion of Medicare payouts it was not entitled to, remains pending.

Medicare Advantage, an alternative to the standard fee-for-service Medicare in which private insurers manage health benefits, is the fastest growing form of government health insurance, with enrolment of 18 million people last year.

The dismissed lawsuit said that since at least 2005, UnitedHealth knew many of the diagnosis codes it submitted to the Medicare programme for increased payments, based on "risk" factors like health status, were not supported by patients` medical records.

But the company turned a blind eye, the lawsuit said, funding and encouraging one-sided chart reviews of patients of HealthCare Partners, which provided services to UnitedHealth beneficiaries in California.

As a result, UnitedHealth was able to wrongfully retain risk adjustment payments it received from the government, the lawsuit said.

The Department of Justice filed the lawsuit in May after it partially intervened in a whistleblower lawsuit brought by James Swoben, a former employee of Senior Care Action Network Health Plan and a consultant to the risk adjustment industry.

The case is U.S. ex rel Swoben v. Scan Health Plan et al, U.S. District Court, Central District of California, No. 09-cv-05013.

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