End of an Era? Special Master Recommends Dismissing Long-Running Medicare Advantage FCA Case

A court-appointed special master recently recommended granting summary judgment for the defense in a long-running False Claims Act (FCA) litigation against UnitedHealth Group. The case, U.S. ex rel. Poehling v. UnitedHealth Group, Inc., involves allegations by the government and a private relator that UnitedHealth Group, Inc. (UnitedHealth), a Medicare Advantage provider, violated the “reverse false claims” provision of the FCA by failing to repay reimbursement payments it received from Medicare based on millions of diagnostic codes submitted by medical providers — but which conflicted with codes later assigned by UnitedHealth’s internal “chart review” process. No. 16-0897-FMO-PVCx, 2025 WL 682285 (C.D. Cal. Mar. 3, 2025) (Special Master’s Report). In the March 3, 2025 decision, Special Master and retired U.S. magistrate judge Suzanne Segal concluded that evidence of the inconsistency between the provider-submitted codes and the reviewer-assigned codes was not enough to survive summary judgment without proof that the provider-submitted codes were actually wrong. The Special Master went on to deny the government’s partial summary judgment motion, holding that the second prong of the “reverse” false claims provision contains a materiality requirement, despite not expressly including the term “material.”

The government’s allegations center on Medicare Advantage reimbursements paid to UnitedHealth. These types of reimbursements are determined based on a patient’s medical condition using diagnostic codes submitted by providers. However, Medicare Advantage insurers, like UnitedHealth, also use a “chart review” process in which internal reviewers independently review patients’ files to assign the applicable codes. Because sometimes the reviewers’ codes did not match the providers’ codes, the government claimed that UnitedHealth was wrongfully paid, and was required to return, around $2.1 billion in payments attributable to around two million provider-assigned diagnostic codes that did not match the reviewer-assigned codes. According to the government, UnitedHealth’s failure to repay those funds violated the second reverse false claims prong.

After 14 years of litigation before the U.S. District Court for the Central District of California, the parties filed cross motions for summary judgment. UnitedHealth moved for summary judgment on the government’s claims, and the government moved for partial summary judgment seeking a ruling that the second reverse false claims prong does not contain a “materiality” requirement.

The court referred the motions to the Special Master who recommended that the court rule for UnitedHealth as to both its own and the government’s motions.

As to UnitedHealth’s motion, the Special Master concluded that the government failed to present evidence sufficient to create a fact issue as to whether the provider-assigned diagnostic codes were actually improper. It was undisputed that the government did not review the underlying medical records or offer evidence of any different diagnostic codes that should have been assigned. Rather, the government argued that discrepancies between the provider-assigned codes and chart reviewers’ assigned codes, along with evidence of the quality of UnitedHealth’s chart reviewers, created a fact issue. The Special Master disagreed, reasoning that, on the record presented, “a jury would be required to speculate as to whether the diagnostic codes were actually incorrect.”

The Special Master similarly ruled for UnitedHealth on the government’s motion. The government had argued that the second reverse false-claims prong did not require proof of materiality because the inclusion of the term “material” in the first prong meant that the absence of the term from the second prong was deliberate. The Special Master disagreed. Consistent with the Supreme Court’s recognition that the FCA “tracks the common law” and is “largely a fraud statute” — the Special Master concluded that materiality applies to reverse false claims actions under the second prong.

On April 2, 2025, the government filed an objection to the Special Master’s Report and has asked the court to reject it. The parties have noticed a hearing for June 5, 2025, and the court has vacated all other pretrial deadlines in the case in the meantime. We will continue to monitor the case for further developments.

© Arnold & Porter Kaye Scholer LLP 2025 All Rights Reserved. This Blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.