Whistleblower suit says health plan cheated government out of more than $1 billion
Josh Valdez took an executive level job in April 2010 expecting to improve medical services at two Puerto Rican Medicare Advantage health plans owned by a subsidiary of New Jersey company: Aveta Inc.
But a few months after coming on board, the former government health official claims, he discovered that the plans — MMM Healthcare and PMC Medicare Choice — had been cheating Medicare out of hundreds of millions of dollars for years, according to a whistleblower lawsuit he filed in federal court.
Valdez accuses the health plans of “rampant fraud,” alleging they overcharged Medicare $300 million to $350 million a year from 2007 through 2010. He claims that Aveta Chief Executive Officer Richard Shinto fired him “in retaliation for his outspoken opposition to these illegal practices.” Valdez filed the lawsuit in Santa Ana, California, in April 2011, but it remained under court seal until February of this year. The case is pending.
Related: Valdez suit against Aveta
In a May 23 statement to the Center for Public Integrity, the health plans called Valdez a “former disgruntled employee” and added that the company “categorically denies the allegations in the former employee’s lawsuit and is highly confident that it will prevail in the case.”
Valdez is a veteran health care executive and consultant who headed the California regional office of the U.S. Department of Health and Human Services from 2001 through 2003 under President George W. Bush. He also was a health policy adviser to Republican Mitt Romney during the 2012 presidential race.
Valdez said in court papers that he served as president of MSO of Puerto Rico, also owned by a subsidiary of Aveta, for eight months until his dismissal in December 2010. MSO worked with local doctors to coordinate coverage for some 230,000 elderly and disabled people then enrolled in those two Aveta-related Medicare Advantage health plans. In a press release touting his hire, Aveta said Valdez would enhance medical care while “effectively managing healthcare costs.”
Related: Why Medicare Advantage costs taxpayers billions more than it should
Aveta’s Puerto Rico health plans and MSO are now operated by InnovaCare Health Solutions, according to the firm’s website. InnovoCare has the same Fort Lee, N.J. office and phone number as Aveta. Several members of the Aveta board, including founding principal investor Daniel E. Straus, have been affiliated with both companies. Innovacare general counsel Christopher J. Joyce declined to discuss the corporate structure.
Straus, a prominent investor in several health-care businesses, also has worked with hedge funds and as a New York City real estate developer. Joyce said Straus would have no comment.
The whistleblower suit is significant not only for the magnitude of overbilling it alleges. It also raises questions about federal oversight of billing practices by health plans that contract with the government to cover nearly 16 million Americans, at a cost expected to top $150 billion this year.
Related: Get involved: Help Medicare Advantage investigation go further with donations and news tips
The federal government paid the two Puerto Rico plans a total of between $1 billion and $1.8 billion annually from January 2007 through December 2010, according to the suit. Up to $350 million a year was for bills that were “improperly inflated,” according to Valdez.
There’s more to this story. Click here to read the rest at the Center for Public Integrity.
This story is part of Medicare Advantage Money Grab. Billing errors cost taxpayers billions. Click here to read more stories in this investigation.
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Copyright 2014 The Center for Public Integrity. This story was published by The Center for Public Integrity, a nonprofit, nonpartisan investigative news organization in Washington, D.C.
