Seoul Medical Group and Advanced Medical Management Admit to False Medicare Claims; Founder Agrees to $1.76 Million Settlement
Arizona, March 26 – Seoul Medical Group Inc. and its subsidiary, Advanced Medical Management Inc., have agreed to pay a staggering $58.74 million to settle allegations of fraudulent claims under the False Claims Act, the U.S. Attorney’s Office for the Central District of California announced on Tuesday.
The companies, headquartered in Koreatown, Los Angeles, were accused of submitting false diagnosis codes to inflate payments from the Medicare Advantage program between 2015 and 2021. The settlement is one of the largest in recent history related to Medicare fraud.
False Diagnosis Codes Used to Inflate Medicare Payments
According to federal prosecutors, Seoul Medical Group manipulated patient records by submitting inaccurate diagnosis codes. This led to higher payments from Medicare Advantage, a program that provides private health insurance plans for Medicare beneficiaries.
Additionally, Dr. Min Young Cha, the founder and former president of Seoul Medical Group, has agreed to pay $1.76 million for his alleged role in submitting false diagnoses. These included exaggerated cases of spinal enthesopathy and sacroiliitis, conditions related to chronic pain and inflammation in the spine.
Federal investigators also uncovered a deeper conspiracy involving Renaissance Imaging Medical Associates Inc., a Northridge-based radiology group. The company has agreed to pay $2.35 million for allegedly assisting Seoul Medical in supporting fraudulent spinal diagnoses.
How the Fraud Worked
Medicare Advantage, also known as Medicare Part C, is a system where private insurers offer managed care plans for Medicare beneficiaries. These plans receive fixed monthly payments from the Centers for Medicare & Medicaid Services (CMS), adjusted based on patient demographics and health conditions. The adjustment process uses “risk scores,” meaning the more severe a patient’s condition, the higher the reimbursement.
Authorities alleged that Seoul Medical Group deliberately submitted false medical diagnoses, inflating patients’ risk scores. This manipulation led to increased Medicare payments to the MA Plans, which in turn provided a portion of those funds to Seoul Medical.
When Medicare Advantage Plans questioned the accuracy of these diagnoses, Seoul Medical enlisted Renaissance Imaging to create radiology reports to justify the fraudulent claims, according to the U.S. Attorney’s Office.
Background of Seoul Medical Group
Founded in 1993 in Los Angeles, Seoul Medical Group operates in at least six states and has a large network of healthcare professionals, including 150 primary care providers and over 1,000 specialists. Dr. Cha led the company until 2023.
This case highlights the increasing scrutiny on medical providers participating in government healthcare programs, with federal authorities cracking down on fraudulent billing practices.
Federal Crackdown on Medicare Fraud
This settlement is part of a broader effort by federal agencies to combat Medicare fraud, which costs U.S. taxpayers billions of dollars each year. The False Claims Act allows the government to recover funds obtained through fraudulent practices and holds companies accountable for misusing public healthcare programs.
Authorities emphasized that ensuring accurate billing practices is crucial to maintaining the integrity of Medicare Advantage. “Fraudulent claims not only cost taxpayers but also undermine the trust in our healthcare system,” a spokesperson for the U.S. Attorney’s Office said.
What This Means for Medicare Patients
For Medicare beneficiaries, this case serves as a reminder of the importance of accurate medical diagnoses and ethical healthcare practices. Fraudulent billing practices can ultimately lead to increased costs and decreased trust in the healthcare system.
Patients enrolled in Medicare Advantage Plans should stay informed about their medical records and verify the accuracy of diagnoses listed in their health records. If discrepancies arise, beneficiaries can report potential fraud to the Medicare Fraud Hotline.
Final Settlement and Future Implications
The combined settlement of over $60 million signals a strong warning to medical groups and healthcare providers engaging in fraudulent activities. Seoul Medical Group, Advanced Medical Management, and Renaissance Imaging are now responsible for rectifying the financial damage caused by their actions.
With continued efforts by federal agencies to identify and penalize fraudulent claims, the healthcare industry may face more stringent regulations to prevent similar schemes in the future.
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