OptumHealth accused of fraud in three lawsuits

March 29--OptumHealth Inc.'s efforts to root out fraud and waste from the Medicaid program in New Mexico led to a sudden decision by Gov. Susana Martinez's administration in June 2013 to suspend payments to 15 providers treating low-income patients for mental illness or addiction.

Three years later, with 13 of the 15 accused providers exonerated of criminal wrongdoing by the state Attorney General's Office, OptumHealth itself now stands accused of committing Medicaid fraud in three lawsuits filed against it this year.

An OptumHealth spokeswoman said the company will fight the lawsuits, which accuse it of malfeasance stemming from its state contract to oversee Medicaid payments to mental health providers from July 1, 2009, to Dec. 31, 2013.

In the latest lawsuit, filed earlier this month in the state District Court in Santa Fe, former OptumHealth senior fraud investigator Valerie Tafoya alleges that she discovered $4 million in potential Medicaid billing errors by OptumHealth. She said the company told her to keep quiet about it, and that she was fired for reporting concerns about Medicaid fraud to the Attorney General's Office.

The suit also reveals new details about criminal charges against a former OptumHealth employee accused of falsifying company records.

Tafoya first sued OptumHealth in May 2012. But the case remained under a court-ordered seal for more than three years at the request of the state Attorney General's Office as it investigated her complaint. She filed an amended suit against the company March 18 under the Fraud Against Taxpayers Act.

According to Tafoya's new complaint, the office used evidence she had secured to investigate former OptumHealth compliance manager Debra Gonzales. Tafoya says that, at the attorney general's request, she kept documents Gonzales had altered.

Tafoya specifically alleges Gonzales ordered OptumHealth employees to alter dates on documents that would have shown OptumHealth failed contract requirements with the state. This included changing dates on OptumHealth's responses to complaints (the company had to respond to complaints within 10 days) and altering documents that would have showed that the company did not pay for mental health treatments it was required to cover.

About the time of the allegations, Optum had come under fire for not paying providers in the state for treating Medicaid patients in a timely manner. The state fined the company $1 million and put it under a monitoring program.

A Bernalillo County grand jury indicted Gonzales in May 2014 on 10 fourth-degree felony counts of falsifying documents. She pleaded no contest to two of the counts last summer, a deal with the Attorney General's Office that went largely unnoticed.

Tafoya's complaint names OptumHealth, former Chief Executive Officer Michael Evans and former Chief Operating Officer Marilyn Van Horn as defendants.

Tafoya claims that OptumHealth's higher-ups told her not to investigate improper billing practices of certain providers. She says her boss, Van Horn, did not want to "rock the boat" or "ruffle feathers" with certain providers who were politically connected.

Neither Evans or Van Horn could be reached for comment.

The New Mexico Fraud Against Taxpayers Act allows whistleblowers to recover a portion of money fraudulently obtained from the state. Under the law, the attorney general can intervene and file a claim on behalf of a plaintiff. But if the attorney general declines to step in, a plaintiff such as Tafoya may file the claim on her own. Plaintiffs in such cases stand to gain up to 25 percent of the money returned to the state.

Court records show Balderas' office declined to intervene in Tafoya's lawsuit in November, months after it agreed to the plea deal with Gonzales.

Another former OptumHealth employee, Karen Clark, is bringing a lawsuit under the federal False Claims Act. It contains allegations similar to Tafoya's. Attorneys for OptumHealth's parent company, Minnesota-based insurance giant UnitedHealth Group, have filed a motion to dismiss Clark's suit, saying she cannot produce evidence of false claims.

The third suit was filed by an Arizona company recruited to provide some of the state's Medicaid patients with mental- health treatment after payments to the New Mexico providers were cut off by Martinez's administration. La Frontera Center Inc. alleges OptumHealth and other UnitedHealth Group subsidiaries had accused providers of fraud to cover up their own inability to pay Medicaid claims to those providers. The companies have asked to halt the lawsuit in favor of arbitration.

OptumHealth no longer oversees Medicaid cash paid to providers of mental health care in New Mexico. But it and other UnitedHealth Group companies have other state contracts.

Lauren Mihajlov, a spokeswoman for OptumHealth, said in an email that the company rejects the allegations in all three lawsuits filed against it this year. She said the company "will defend ourselves vigorously."

"With regards to the Tafoya complaint, we investigated as soon as we learned of allegations of employee misconduct, took prompt action based on our findings as to her employment and disclosed the results of our investigation and actions to the New Mexico Attorney General's Office and the New Mexico Behavioral Health Collaborative," Mihajlov said.

She had the same response to The New Mexican's questions about Gonzales.

A grand jury indicted Gonzales on suspicion of making material misrepresentations of fact in documents that Optum furnished to the state between October 2010 and April 2011 as a part of its contract to oversee Medicaid funds for mental health care. She received a sentence of court-supervised probation after pleading no contest to two charges.

The plea deal, approved by District Judge Michael Martinez of Albuquerque, allows for all charges against Gonzales to be dismissed "with no guilt or conviction" if she successfully completes her probation.

James Hallinan, a spokesman for Balderas, said in an email that the Attorney General's Office "adamantly opposed" the condition at Gonzales' sentencing allowing the charges to be dismissed if she successfully completes her probation. The office argued that Gonzales should receive a suspended sentence, which would put the offenses on her permanent criminal record, Hallinan said.

But, he said in an email, "The state entered into the plea with defendant because it was in the best interest of justice and the state."

David Freedman, Gonzales' attorney, said in an interview that his client was not accused of mishandling money. He said he was unaware of Tafoya's lawsuit against OptumHealth as he defended Gonzales in the criminal case.

"I was always concerned that her impetus for making allegations against my client was to obtain money," Freedman said. "But the Attorney General's Office would never tell me if there was a sealed claim that involved my client."

Hallinan said the criminal case against Gonzales was "separate" from the office's investigation into allegations made by Tafoya.

Still, prosecutors asked the court to keep Tafoya's lawsuit under seal because the office was "diligently investigating" allegations of Medicaid fraud that she brought forth.

Then-Assistant Attorney General Jody Curran filed a motion in May 2014 to keep Tafoya's lawsuit sealed because "additional time is needed to conclude the criminal investigation."

Hallinan said in a follow-up email that, although "initially there were questions as to whether the two investigations were overlapping, ultimately the two had no bearing on one another and neither resolution affected the other.

"Each case was handled by separate attorneys and the investigations remained separate," he said.

Justin Horwath can be reached at 505-986-3017 or [email protected].

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