A federal judge has thrown out a False Claims Act lawsuit accusing Sentara Health Plans of fraudulently inflating ACA marketplace premiums in Virginia after multiple large insurer competitors left the market in 2017.
Chief U.S. District Judge Elizabeth Dillon found the claims were ultimately challenges to rates approved by the state, saying that the filed-rate doctrine prevents courts from reopening those approvals.
“The court recognizes that the filed-rate doctrine works a harsh result in this case,” she wrote in her ruling.
The July 31 decision ends a six-year legal fight brought by three marketplace enrollees who accused Sentara of cheating the federal government out of hundreds of millions of dollars in premium tax credits, though the Justice Department ultimately declined to intervene in the case. The three individuals originally filed the sealed whistleblower complaint in October 2020, targeting Sentara Health Plans (formerly Optima Health Plan), along with Hampton Roads, Va.-based parent company Sentara Health and actuarial firm Milliman.
The complaint traced the alleged scheme to 2017, when Anthem Blue Cross Blue Shield stopped offering individual plans on the Virginia exchange, leaving Sentara as the sole ACA insurer across parts of the state. Earlier that year, Aetna had also announced it was pulling out of the state’s exchange for 2018.
Within weeks of Anthem’s announcement, Sentara and Milliman submitted a revised rate filing to Virginia regulators proposing an 81.8% statewide individual rate increase for the 2018 plan year, which was ultimately approved after two reviews. The complaint described it as the largest rate increase in ACA history among insurers with at least 1,000 members. For a family of four in Charlottesville buying the cheapest available Bronze plan, the complaint said monthly premiums jumped from $940 under Anthem in 2017 to $2,920 under Sentara.
The three enrollees alleged the rate hike was built on false and misleading calculations, including accusations that Sentara imposed a 25% surcharge that wasn’t based on any actuarial analysis. The complaint also alleged Milliman set projected federal risk adjustment payments to zero in the rate filing, even though internal data suggested Sentara would receive tens of millions of dollars through the program. Risk adjustment payments offset premiums on a dollar-for-dollar basis, so eliminating them from the projection inflated premiums by nearly $100 million statewide, according to the complaint. In total, the enrollees said the alleged fraud led to more than $200 million in federal overpayments in the form of advanced premium tax credits.
In 2019, Sentara issued over $98 million in rebates to Virginia enrollees for the 2018 plan year.
“We are grateful to the District Court for its dismissal of this case,” Sentara said in a public statement. “This lawsuit was an attempt to misuse the law for personal gain. This dismissal reaffirms what we’ve said from the beginning: the facts and the evidence are on Sentara’s side. At a time when Virginians were at risk of losing access to ACA coverage, Sentara stepped up to meet the need — quickly expanding coverage and supporting the health of our communities. Sentara will continue to focus to our not-for-profit mission: improving health and access to care across the Commonwealth.”
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