Health care providers in Koreatown and Northridge have agreed to pay nearly $63 million to settle allegations that they caused the submission of false diagnosis codes for two spinal conditions to increase payments from the Medicare Advantage program, officials announced Wednesday.
Seoul Medical Group Inc. and its subsidiary Advanced Medical Management Inc., headquartered in Koreatown, will pay $58.74 million, and their former president and majority owner, Dr. Min Young Cha, has agreed to pay $1.76 million for allegedly violating the False Claims Act by causing the submission of false diagnosis codes, according to the U.S. Attorney’s Office.
Renaissance Imaging Medical Associates Inc., a Northridge-based radiology group that worked with Seoul Medical, has also agreed to pay $2.35 million for allegedly conspiring with Seoul Medical Group in connection with the false diagnoses for the two spinal conditions.
“Medicare Advantage is a vital program for our seniors, and the government expects health care providers who participate in the program to provide truthful and accurate information,” Acting Assistant Attorney General Yaakov Roth of the U.S. Department of Justice’s Civil Division said in a statement.
“Today’s result sends a clear message to the Medicare Advantage community that the United States will zealously pursue appropriate action against those who knowingly submit false claims for taxpayer funds,” Roth added.
Federal prosecutors contend that from 2015 to 2021, Seoul Medical Group and Cha submitted diagnoses for two severe spinal conditions, spinal enthesopathy and sacroiliitis, for patients who did not suffer from either of these conditions.
Prosecutors said that when Seoul Medical Group was questioned by a Medicare Advantage plan about its use of spinal enthesopathy, Seoul Medical Group enlisted the assistance of Renaissance Imaging Medical Associates to create radiology reports that appeared to support the spinal enthesopathy diagnosis. Both diagnoses resulted in an increase in payment from the Centers for Medicare and Medicaid Services to the Medicare Advantage plan, and the Medicare Advantage plan then passed along a portion of the increased payment to Seoul Medical Group, according to the U.S. Attorney’s Office.
The civil settlement resolves claims brought under the qui tam or whistleblower provisions of the False Claims Act by Paul Pew, the former vice president and chief financial officer of Advanced Medical Management. Under the provisions, a private party can file an action on behalf of the United States and receive a portion of any recovery. Officials said the share of the settlement has not yet been determined.