DOJ Declines Prosecution of HealthSun After Company Uses Voluntary Self-Disclosure Policy

Recently, the United States Department of Justice sent a letter regarding their decision to decline prosecution of HealthSun Health Plans, Inc., for violations of wire fraud and health care fraud. The decision – consistent with the Criminal Division Corporate Enforcement and Voluntary Self-Disclosure Policy – came “despite the fraud committed by employees and agents of HealthSun.”

According to the DOJ, from roughly 2015 until early 2020, HealthSun’s former Director of Medicare Risk Adjustment Analytics coordinated a scheme to submit false and fraudulent information to the United States Centers for Medicare and Medicaid Services (CMS), in an attempt to increase the amount that HealthSun received for certain Medicare Advantage (MA) enrollees. As part of the scheme, HealthSun knowingly submitted and/or caused the submission to CMS false and fraudulent information about diagnoses for chronic ailments that enrollees in HealthSun’s MA Plan did not have and/or that were entered into patient health records by non-health care providers. CMS issued approximately $53 million in overpayments to HealthSun as a result of the scheme.

In the letter announcing the decision to decline prosecution, the DOJ outlined factors that played into the decision, including:

1. The timely and voluntary self-disclosure of the misconduct by HealthSun and its corporate parent, Elevance Health, Inc.
2. The full and proactive cooperation by both companies in the matter – including the way the companies provided all known relevant facts about the misconduct, information about the individuals involved in the misconduct, and information obtained from the Companies’ business and personal cell phones – as well as agreement to participate in any ongoing government investigations and potential prosecutions.
3. The timely and appropriate remediation by the companies’, including terminating the employees who were involved, reporting and correcting the false and fraudulent information submitted to CMS, and making substantial improvements to their compliance program and internal controls.
4. The nature and seriousness of the offense.
5. The fact that HealthSun agrees to repay the overpayment to CMS.

The significant improvements to the compliance program by HealthSun include significant investments in designing, implementing, and testing a risk-based and sustainable MA compliance program. Additionally, as noted above, HealthSun agreed to immediately repay the CMS overpayment to the Medicare Trust Fund Account (to the amount of $53,170,114.60). For any additional overpayments identified by CMS as a result of re-running each payment year, CMS may withhold additional funds from HealthSun through the recalculation process.

While the letter does note that it will decline prosecution of HealthSun Health Plans, Inc., it does not “provide any protection against prosecution of any individuals,” and “pertains only to the matter described herein and not to any other matters involving the companies.” Additionally, if DOJ were to learn of new facts that change its decision to decline prosecution, it may reopen its inquiry and prosecute at a later date.

While the news is certainly welcome news to HealthSun, it is particularly welcome because even though the company agreed to repay $53 million in CMS overpayment, the company avoided disqualification for participation in federal health care programs and earned a lower penalty for engaging in health care fraud (compared to the hundreds of millions they may have been on the hook for, had they not voluntarily disclosed the matter and cooperated.