Cigna Faces Whistleblower Lawsuit Over $1.4 Billion in Fraudulent Medicare Advantage Billings

According to a recently unsealed whistleblower complaint, Cigna overbilled Medicare Advantage by over $1.4 billion. The complaint states that the company defrauded the government healthcare plan by inducing nurses to diagnose beneficiaries with non-existent conditions.

The whistleblower lawsuit states that between 2012 and 2017 a division of Cigna systematically billed Medicare for conditions that "did not exist, were not recorded in any medical records and were not based on any clinically reliable information."

The whistleblower, Robert A. Cutler, detected the alleged misconduct while working for Texas Health Management LLC, a Cigna contractor. He filed the lawsuit under the False Claims Act, which allows insiders to report fraud and apply for an award calculated as a percentage of any resulting recoveries.

Whistleblowers generally have a bigger chance of obtaining a reward when the government decides to intervene in their lawsuit. If Cutler’s lawsuit leads to a favorable verdict or a settlement, he could receive up to 30 percent of the total amount recovered by the government.

Cigna’s alleged scheme involved nurse practitioners who illegally made serious diagnoses during home visits. Under Medicare rules, this type of diagnosis has to be made by a physician. Cutler alleges that THM (his employer) advised Cigna that it shouldn’t allow nurses to diagnose serious conditions, but the company’s executives didn’t listen.

In one example, the lawsuit states, Cigna added billing codes for dementia and severe pulmonary disease in the case of a patient whose mental and respiratory functions were normal. Cutler also claimed the company trained nurse practitioners to diagnose arthritis in the case of patients who were merely experiencing fatigue, pain, or weight loss; clearly ignoring the standard medical requirements for such a diagnosis.

New York and The Federal Government Crack Down on Medicare Advantage Fraud

In recent years, the DOJ has investigated several cases of Medicare Advantage fraud. Last March, Geoffrey Berman, the United States Attorney for the Southern District of New York, filed a Medicare Advantage lawsuit against Anthem stating that the company “knowingly disregarded its duty to ensure the accuracy of the risk adjustment diagnosis data that it submitted to the Centers for Medicare and Medicaid Services (“CMS”) for hundreds of thousands of Medicare beneficiaries covered by the Medicare Part C plans [Medicare Advantage]. . . By ignoring its duty to delete thousands of inaccurate diagnoses, Anthem unlawfully obtained and retained from CMS millions of dollars in payments.”

Insurers are paid $200 billion every year for services rendered to Medicare Advantage enrollees. Because this healthcare plan establishes a flat rate per patient depending on the severity of their conditions, it presents many opportunities for fraud. It is enough to systematically diagnose severe, chronic conditions for a large number of patients to receive hundreds of millions of dollars in unlawful Medicare reimbursements. New York prosecutors believe Anthem did this on a large scale, and federal prosecutors are currently evaluating whether Cutler’s lawsuit against Cigna has merit.

Famous Whistleblower Exposes Cigna’s Complicated Past

The Medicare Advantage fraud investigation comes at a time when Cigna is under scrutiny for the role it played in some of the industry’s most questionable lobbying activities. Last June, a confession by Cigna’s former VP of communications-turned-whistleblower, Wendell Potter, became a trending topic on Twitter. As an advocate of health care reform, Potter wrote,

According to Potter, who supports Medicare for all, the health care industry’s lobbying group American Health Insurance Plans (“AHIP”), manipulated information to convince Americans that Canada’s system was inefficient. In reality, Potter explained, “no one gets turned away from doctors due to lack of funds” in Canada. Meanwhile, “In America, exorbitant bills are a defining feature of the system.”

Potter had already exposed Cigna’s unlawful tactics in his 2010 book, Deadly Spin: An Insurance Company Insider Speaks Out on How Corporate PR Is Killing Health Care and Deceiving Americans.

Considering the magnitude of Cigna’s Medicare Advantage billings, the company could be forced to pay back hundreds of millions of dollars in the event of a fraud settlement.


Steve Halperin

New York trial attorney Steve T. Halperin is a well-known litigator with extensive knowledge of whistleblower laws and the New York False Claims Act. He has 28 years of experience as one of New York’s top tier attorneys. From the Manhattan offices of HalperinBikel, Steve’s whistleblower cases can run the gamut from lawsuits against healthcare. Whistleblowers: A New Yorker’s Step By Step Guide systems and providers cheating on New York Medicaid to private companies providing worthless services, or false billings by government contractors. With hundreds of winning verdicts and favorable settlements in healthcare and corporate cases, attorney Halperin’s meticulous preparation, courtroom acuity, and client-centered professionalism create remarkable outcomes.

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