SANTA FE, N.M. (CN) — Former providers of Medicaid-funded mental health care in New Mexico have accused companies that once oversaw hundreds of millions of Medicaid dollars of fabricating fraud allegations to duck $11 million in bills.
Defendants United Healthcare and its subsidiary OptumHealth New Mexico were contracted to oversee the state’s Medicaid-funded mental health programs from 2009 to 2013.
United’s statewide contract was with the New Mexico Human Services Department and its 16-member Inter-Agency Behavioral Health Purchasing Collaborative, which is referred to in the complaint as “the Collaborative.”
But 10 former behavioral health care providers claim that within six months of assuming statewide oversight, United Healthcare and OptumHealth were fined $1 million for failing to pay providers for their services.
United and OptumHealth also instituted a billing system created by another subsidiary company which was supposed to improve timely payments, Border Area Mental Health et al. say in the June 22 complaint in Santa Fe County Court.
In late 2012, as the termination of its contract with the state approached, United Healthcare “made a business decision to use its fraud and abuse allegations as a source of more revenue,” the complaint states.
The defendants conducted a pre-audit investigation of behavioral health care and substance abuse counseling providers, including the 10 plaintiffs, and uncovered what it called “billing errors,” according to the complaint.
United Healthcare then hired co-defendant Public Consulting Group to conduct a full audit of 15 subcontracted providers.
But lead plaintiff Border Area Mental Health, et al., claim the audit had a “pre-determined outcome that HSD [New Mexico Human Services Department] would make a finding of ‘credible allegations of fraud’ against each of the fifteen providers.”
In fact, the complaint states: “Although PCG determined that all fifteen of the audited providers failed the audit, it nonetheless conclude that ‘PCG’s Case File Audit did not uncover what it would consider to be credible allegations of fraud, nor any significant concerns related to public safety.’
“United and HSD directed PCG to remove the above-quoted sentence from the final report.”
United and Optum then suspended more than $11 million in payments owed to the providers.
However, the plaintiffs say, the audit was not really independent: “United actually participated ‘in partnership’ with PCG to audit United’s subcontracted providers.” With the audit in hand, the state announced “credible allegations of fraud,” implying that the providers had knowingly overbilled Medicaid, according to the complaint.
The plaintiffs say that eight months earlier, in October 2012, Optum Health New Mexico CEO Elizabeth Martin “made a written proposal to the Collaborative, representing that United could solve the made-up ‘institutional fraud’ problem by terminating United’s existing contracted ‘bad actors’, including plaintiffs, and substituting Arizona providers to ‘assume wholesale management’ of New Mexico’s behavioral health services.”
The complaint adds: “Another component of United’s strategy was to cover up its defective data and claims processing system and its mismanagement of state and federal money by blaming its subcontracted providers, including plaintiffs, for billing errors that United characterized as ‘institutional fraud.'”
UnitedHealth and Optum contracted with La Frontera, an Arizona supplier of behavioral health and substance abuse services, to replace the 15 providers who had been suspended.
However, in a February lawsuit this year, La Frontera claimed that Optum and United never paid it for $3.9 million in billed services given to New Mexico subscribers, plus another $2 million in expenses accrued while moving La Frontera operations into New Mexico, which United promised to reimburse.
The New Mexico State Medicaid Fraud Control Unit investigated all 10 plaintiff companies based on the allegations by United, Optum and Public Consulting Group, “made no finding of fraud or wrongdoing against any of [the] plaintiffs,” according to the complaint.
The plaintiffs seek the $11 million in suspended payments, and punitive damages for interference with contract, prima facie tort, civil conspiracy and unfair trade.
They are represented by Brian Davis, with Dais & Gilchrist in Albuquerque, who could not be reached by telephone for comment. Nor could representatives of OptumHealth New Mexico.
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