N.M. scientist says he saved the state hundreds of millions; now he wants his cut [The Santa Fe New Mexican]

Feb. 17—A New Mexico researcher who says his analysis of Medicaid data helped the state recover more than $221 million from four health care companies is hoping a federal judge will determine he deserves a cut — not just of that money but of another $660 million he says is still outstanding.

Jacob Kuriyan, an 82-year-old Corrales resident, alleges in a whistleblower lawsuit that using a data analysis modeling system he designed, he identified hundreds of millions of dollars in overpayments to four companies contracted to manage Medicaid in New Mexico. Those four companies, also known as "managed care organizations," are HCSC Insurance Service Co., more commonly known as Blue Cross and Blue Shield of New Mexico; Molina Healthcare of New Mexico; Presbyterian Health Plan; and UnitedHealthcare of New Mexico.

The four companies are required by federal law and by their contracts to spend at least 85% of the Medicaid funding on medical services only — a requirement put into place by the Patient Protection and Affordable Care Act in an effort to keep health care companies' profits from ballooning out of control, said Alan Grayson, an Orlando, Fla.-based attorney representing Kuriyan. Instead, Kuriyan claimed, in 2014, the companies spent between 72.5% and 81.5%.

Grayson, a former Florida congressman who was in office when Obamacare became law in 2010, said the landmark health care legislation also included a requirement that if the government overpays an MCO for Medicaid, the company has to return the extra money within 60 days or pay three times that amount in damages.

Kuriyan says while the state eventually recouped $221 million of overpayments from the four companies, it never collected the roughly $660 million in damages.

And, as a whistleblower, Kuriyan alleges, he's entitled to a portion of all that money.

To Kuriyan and his legal team, the issue is clear-cut: They allege the companies held on to government money meant for Medicaid longer than the law allows, so the firms should own up to their late fees. That would mean a healthy addition to state coffers — with Kuriyan getting a cut for catching it.

But in a case that's been fulminating for the better part of a decade, there's no certainty of a quick resolution. Rather than championing Kuriyan's cause, the state is aligning itself with the health care companies, alleging the money they got back was part of a "normal reconciliation process" and focusing in recent months on calling into question whether Kuriyan did his own work or merely piggybacked on publicly available information — potentially disqualifying the case.

A Blue Cross spokeswoman said the company doesn't comment on litigation. Molina and UnitedHealthcare didn't respond to requests for comment.

Presbyterian declined an interview, but a spokeswoman pointed out two magistrate judges have recommended dismissing the case.

"Presbyterian is deeply committed to serving our state's Medicaid population," spokeswoman Amanda Schoenberg wrote in a prepared statement. "Although we are not able to provide further details about pending litigation, we respect the ongoing legal process and know that this case will be decided in the appropriate venue."

The U.S. Department of Justice declined to comment on this story. The state Department of Justice and Human Services Department both declined to answer questions because of the ongoing lawsuit and pointed to court records for their position. The Governor's Office declined to comment, citing pending litigation.

Kuriyan's lawsuit has now been pending for more than seven years. In a recent interview with The New Mexican, Kuriyan said his own claim on the money aside, it represents money owed to taxpayers and should be collected.

"I'm absolutely confused ... as to why the state doesn't collect it and set it aside," he said. "Even if they don't want to give it to me, collect it so that we don't lose it."

Getting the numbers

Kuriyan didn't just stumble into the labyrinthine world of Medicaid data analysis.

Born in India, he was trained as a theoretical physicist, was personally invited to join Princeton's Institute for Advanced Study by J. Robert Oppenheimer and worked for years at the University of California, Los Angeles, in both the physics and meteorology departments. He founded two health care analytics software companies and developed a proprietary modeling system to analyze and predict health care costs.

Kuriyan said in 2013 he approached Julie Weinberg, at the time the Medicaid director under then-Gov. Susana Martinez. Kuriyan said he told Weinberg he thought he could help identify ways for the state to save money.

"She said, 'Well, prove to me that you could do something different,' " Kuriyan recalled.

The Human Services Department gave Kuriyan access to nonpublic Medicaid data for 2010, 2011, 2012 and 2013. Kuriyan, who said he did the work on spec and did not expect to be paid unless he saved the state money, said his analysis focused on costs of New Mexicans who have chronic diseases or cancer, which he says are the main drivers of spending.

"So if I could predict the number of people getting these diseases, I should be able to predict the costs," he said. "... I started looking at the forecasting model from the point of understanding how many people develop these diseases in a community."

Kuriyan said he analyzed three years of spending based on the confidential Medicaid data.

"[I] was able to predict the fourth year correctly," he said, adding he predicted the 2013 costs within about 5%. "... But when I went to do 2014, everything came out wrong."

Kuriyan said his estimates for what the spending should have been in 2014 were far too low. He checked his work but said he found nothing wrong, even after accounting for changes in the Medicaid program that year.

Suspected overpayment

Kuriyan said he believes the inflated Medicaid costs in 2014 came from the four health care companies keeping overpayments from the Medicaid program, which he originally thought could be as high as $250 million.

"[Kuriyan] noticed that premiums paid to Defendants' MCOs — and consequently, Defendants' profits — had jumped considerably between 2013 and 2014, even though patients' medical needs remained the same," Kuriyan's lawsuit said. "... This 'jump' could not be explained in any way other than overpayments to Defendants."

Kuriyan, who had never secured a written contract, said he took his findings back to the state, but by that point the people he had been in contact with previously had left the Human Services Department.

Kuriyan eventually did present his findings to HSD leaders in May 2016. According to his lawsuit, the state initially denied the overpayments existed, citing its own calculations and the results of an actuarial audit conducted in 2015.

Kuriyan filed his lawsuit in October 2016. His lawsuit alleges that same year, the state began recouping those overpaid funds. Between December 2016 and November 2020, the suit says, the state recovered:

* $77.8 million from Presbyterian.

* $73.1 million from Molina.

* $51.5 million from United Healthcare.

* $18.7 million from BlueCross and BlueShield of New Mexico.

"[They] basically told me that, you know, we collected the money, but it has nothing to do with you," Kuriyan told The New Mexican. "'It was our own work on something else unrelated to what you said.'"

Grayson said it's "undisputed" that those funds were only recovered long after the 60 days allowed by law.

'Opportunistic relator'

One potential barrier to would-be whistleblowers like Kuriyan is the question of whether the allegations have been publicized before. The defendants in Kuriyan's case have raised the issue in connection with the timing of a 2015 Legislative Finance Committee report that looked at overpayments.

In a joint motion to dismiss the lawsuit in late 2020, the health companies called Kuriyan "an opportunistic relator who has no independent knowledge of any Defendant's conduct and has never presented anything to the Government that had not already been publicly disclosed."

"Relator" is the legal term for a person filing a whistleblower lawsuit.

State and federal prosecutors chose not to support the lawsuit, noting in a 2020 filing they were "unable to discover evidence of fraud during the course of its investigation, and because [the New Mexico Health Service Department's] recoupment of the funds was a function of the requirements of the contracts and not due to fraud."

The state has requested the case be dismissed as well, citing the defendants' argument the information had already been disclosed.

That could result in the case being thrown out.

"The [False Claims Act] provides that a court 'shall dismiss an action or claim ... if substantially the same allegations or transactions as alleged in the actions or claim were publicly disclosed,' " U.S. Magistrate Judge Kirtan Khalsa wrote in a recommendation in the case.

But Grayson said the Legislative Finance Committee report actually determined there wasn't any fraud — the opposite conclusion Kuriyan came to based on his analysis.

"They are arguing that the case should be dismissed because the 2015 Legislative Finance Committee report, which said that there was no fraud, was a public disclosure of the fraud," he said.

Grayson also said information has to be publicized by news media, calling the contention a Legislative Finance Committee report is part of the news media "farcical."

What's next?

For now, the case is pending in federal court, awaiting rulings from U.S. District Judge James O. Browning on whether Kuriyan should get a share of the $221 million; what will happen with Kuriyan's claim that the health care companies still must pay the $660 million, and whether the case should be dismissed altogether because of the defendants' and the state's argument Kuriyan wasn't the "original source" of the complaint.

Magistrate Judge Khalsa recommended in August the case be dismissed. Khalsa wrote in part she didn't think Kuriyan proved his analysis had an impact on the state's process or the state recovered the money based on his work. She also agreed with the defendants the allegations had been published by the Legislative Finance Committee report.

Grayson said because it's been so long since 2014, dismissal of Kuriyan's lawsuit would mean the state no longer has any option to recover the $660 million in damages and criticized state attorneys for siding with the health care companies.

"It's not just cutting off your nose to spite your face. It's decapitating yourself to spite your face," he said. "... The people that end up paying for that is the government and the taxpayers."

Grayson said the defendants' alleged actions are even more serious considering the case involves Medicaid, which is supposed to provide care to the state's most vulnerable residents.

He had harsh words for the defendants and claimed the Human Services Department and state Department of Justice have "completely, completely failed to do their job. There is a very simple way to never have to worry about treble damages. ... You simply pay your overpayments back the way you're supposed to."

As for Kuriyan, he said he's looked preliminarily at other states' Medicaid data and thinks New Mexico is not alone.

"I'm not overly concerned if I lose out here, as long as I can prove I brought the money back," he said. "Another state will want me to do it. ... I'm willing to go on to the next project."

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