United States v. Anthem, Inc.

Background

The Government brought a civil action under the False Claims Act, alleging that Anthem knowingly disregarded requirements governing the accuracy of diagnosis information submitted to the Centers for Medicare and Medicaid Services for Medicare Part C plans. The Government alleges that Anthem failed to delete inaccurate diagnoses and thereby obtained and retained millions of dollars in payments from the agency.

The opinion describes Medicare Part C requirements that Medicare Advantage organizations maintain compliance programs, follow diagnosis-coding and medical-record standards, and delete submitted diagnosis codes when they determine the codes do not satisfy risk-adjustment requirements. The Government alleges that Anthem understood these obligations through its agreements, training materials, and internal coding manual.

Anthem moved to strike allegations concerning the Government’s settlements with other Medicare Advantage organizations or health-care providers. It also moved to transfer the case to the Southern District of Ohio or, alternatively, to dismiss the amended complaint.

Motion to Strike

Under Federal Rule of Civil Procedure 12(f), a court may strike material from a pleading if it is redundant, immaterial, impertinent, or scandalous. The court explained that such motions are generally disfavored and that the moving party must identify the challenged material precisely and show, among other things, that the allegations have no bearing on the case and would prejudice the movant.

The court was not inclined to strike the disputed paragraphs. The order’s conclusion states that Anthem’s motion was denied.

Motion to Transfer

The court considered transfer under 28 U.S.C. § 1404(a), which permits transfer for the convenience of the parties and witnesses and in the interests of justice when the statutory requirements are met. The parties agreed that the False Claims Act allows nationwide service of process, so venue in the Southern District of Ohio was not disputed.

The court found that the Government’s choice of forum was entitled to no weight because the Government could litigate in either forum. It treated the location of the alleged decisionmakers as more important than the location of employees who submitted the data. The court found the location of operative facts neutral against transfer, the location of documents neutral, and the convenience of nonparty witnesses weighed against transfer because many relevant witnesses appeared to be outside Ohio, including several in the Northeast.

After considering these factors, the court denied Anthem’s motion to transfer.

Motion to Dismiss

The court reviewed the amended complaint under Rule 12(b)(6), which asks whether the complaint states a legally sufficient claim, assuming well-pleaded facts are true and drawing reasonable inferences for the plaintiff. The court emphasized that it was not deciding the evidence or the ultimate truth of the allegations at this stage.

The Government’s False Claims Act theory required it to plausibly allege materiality. Materiality means that the alleged misrepresentation was important to the Government’s payment decision. The court explained that materiality must be pleaded with particularity and cannot rest only on the fact that a requirement was labeled a condition of payment, that the Government had the option to refuse payment, or that the alleged violation was minor.

Anthem argued that the Government had to show that the Centers for Medicare and Medicaid Services absolutely would have refused payment if it had known about the alleged misrepresentations. The court rejected that interpretation. It stated that an absolute refusal to pay would establish materiality, but that this is materiality’s ceiling, not its minimum requirement. The relevant question is whether the information would likely have mattered to the payment decision.

The court agreed with Anthem that the Government had not identified contract language expressly stating that violations of CMS regulations would result in nonpayment. But it held that the absence of an express payment condition did not require dismissal because that factor was not automatically decisive. The court also considered allegations that CMS audited Medicare Advantage organizations, sometimes recovered overpayments, and had sued other organizations over similar noncompliant policies. Finally, the court found that the alleged financial harm—more than $100 million in total overpayments and tens of millions of dollars per year—supported the conclusion that the alleged violations were not minor or insubstantial.

Disposition

For these reasons, the court denied Anthem’s motion. The order directed the Clerk of Court to terminate ECF No. 36. The opinion does not state separate disposition language for each component of the motion beyond the court’s discussion of declining to strike the allegations, denying transfer, and denying dismissal.