Insurance company cheated Medicare out of $1 Billion says lawsuit

Josh Valdez a former executive with two Puerto Rican Medicare Advantage health plans owned by a subsidiary of Aveta Inc, has filed a False Claims Act lawsuit saying that the companies have been cheating Medicare out of hundreds of millions of dollars.

Valdez is no neophyte. He headed the California regional office of the U.S. Department of Health and Human Services and was also a health policy adviser to Mitt Romney in 2012.

The federal government paid the two Puerto Rico plans around $1.8 billion from 2007-2010. The companies, MMM Healthcare and PMC Medicare Choice, according to the suit, sought out chronically ill patients who would receive the highest Medicare payment rates. However the companies overcharged them by manipulating the billing formulas known as a “risk score.” Medicare sets risk scores for all patients based on medical data submitted by the health plans that indicates how sick patients are. The more ill the patient, the higher the rates.

Valdez alleges that the scores were fraudulent as they were based on diagnosis codes that were not substantiated by medical records or the medical conditions of the patients.


Jeffrey Newman represents whistleblowers