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(Adds further details on lawsuit, comment from UnitedHealth)
By Nate Raymond
May 2 (Reuters) - The U.S. Justice Department has accused UnitedHealth Group Inc of obtaining inflated payments from the government based on inaccurate information about the health status of patients enrolled in its largest Medicare Advantage Plan.
The complaint, filed in federal court in Los Angeles on Monday, came after the Justice Department earlier this year intervened in two separate whistleblower lawsuits against the country's largest health insurer.
"This action sends a warning that our office will continue to scrutinize and hold accountable Medicare Advantage insurers to safeguard the integrity of the Medicare program," Acting U.S. Attorney Sandra Brown in Los Angeles said in a statement.
Matthew Burns, a UnitedHealth spokesman, said the company complied with relevant rules and was transparent "about how we interpreted the government's murky policies."
"We reject these claims and will contest them vigorously," he said in a statement.
UnitedHealth's stock was trading down 0.58 percent at $173.57 on the New York Stock Exchange following the Justice Department's announcement of the case.
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 healthcare, with enrollment of 18 million people last year.
UnitedHealth is the country's largest Medicare Advantage organization, receiving billions of dollars from the U.S. Centers for Medicare & Medicaid Services to provide healthcare to people enrolled in its plans, the lawsuit said.
The lawsuit said that since at least 2005, UnitedHealth knew many of the diagnosis codes it submitted to the Medicare program for increased payments based on "risk" factors like patient health status were not supported by patients' medical records.
But the company turned a blind eye and funded and encouraged 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 complaint was filed after the Justice Department 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 Justice Department said it planned to file a second complaint by May 16 against UnitedHealth after intervening in another whistleblower lawsuit.
Both cases were filed under the False Claims Act, which allows whistleblowers to sue on the government's behalf to recover taxpayer money paid out based on fraudulent claims. If successful, whistleblowers receive a percentage of the recovery.
The case is U.S. ex rel Swoben v. Secure Horizons et al, U.S. District Court, Central District of California, No. 09-cv-05013. (Reporting by Nate Raymond in Boston; Editing by Andrew Hay)