Discovery Attempt by Alleged Fraudulent Health Care Provider Fails
Post 5232
Read the full article at https://www.linkedin.com/pulse/party-seeking-discovery-entitled-anything-relevant-zalma-esq-cfe-ce7kc, see the video at https://rumble.com/v7204g8-discovery-is-entitled-to-anything-relevant-to-partys-claim-or-defense.html and at https://youtu.be/Nuet_er3qXU, and https://zalma.com/blog plus more than 5200 posts.
Upcoding and Health Care Fraud
In UnitedHealthcare Services, Inc., et al. v. Team Health Holdings, Inc., et al., No. 3:21-cv-00364-DCLC-DCP, United States District Court for the Eastern District of Tennessee, District Judge Clifton L. Corker (November 18, 2025) This is a discovery ruling, not a final merits decision.
The Disputes
This is a fraud/RICO lawsuit brought by UnitedHealthcare (and affiliates, collectively “United”) aganst TeamHealth (a large physician staffing company focused on emergency medicine). The companies have a history of mutual litigation over billing practices, including prior suits where TeamHealth accused United of underpaying claims (“downcoding”) and won substantial judgments/arbitrations against United.
Key Facts and Allegations
Plaintiffs’ Claims
TeamHealth allegedly engaged in systematic upcoding by submitting claims with inflated billing codes (CPT codes) that misrepresent the acuity/level of emergency services provided, leading to overpayments with simple cases (e.g., indigestion) billed as high-complexity critical care.
United Health estimated overpayments of more than $100 million since 2016.
Causes of action:
1. Common-law fraud and negligent misrepresentation.
2. Violations of Tennessee insurance fraud statutes (Tenn. Code Ann. §§ 56-53-102, -103, -107).
3. Tennessee Consumer Protection Act and similar state laws.
4. Federal civil RICO (18 U.S.C. § 1962(c) – substantive) and RICO conspiracy (§ 1962(d)): Alleging TeamHealth operated an “association-in-fact” enterprise to conduct patterned fraud via mail/wire.
Defendants’ Position (TeamHealth):
Denies fraud; claims its coding is standard and appropriate. Argues United’s allegations rely on comparisons to other providers’ coding rates, making comparator data relevant for defense (e.g., to show TeamHealth’s practices are industry-normal, not fraudulent or indicative of a distinct RICO enterprise).
During fact discovery, TeamHealth served Requests for Production:
1. “Coding acuity data” (billing code distributions by severity level) from Sound Physicians (an emergency medicine group) and other United-affiliated or Optum-related EM providers.
2. Documents showing the corporate structure of Sound Physicians and those other entities.
TeamHealth’s Relevance Argument:
Sound Physicians is partially owned by Optum (a UnitedHealth Group affiliate since a 2018 investment). If Sound (allegedly “United-affiliated”) uses similar high-acuity coding or similar decentralized corporate structures, it undermines United’s claims that TeamHealth’s practices are outlier, fraudulent, or evidence of a nefarious RICO “enterprise” (vs. normal business). Rebuts intent, “distinctness” of enterprise, and non-standard coding allegations.
United’s Counterargument:
Optum’s stake in Sound is a passive minority investment; United does not control Sound’s coding policies, billing, or operations. Data from an uncontrolled third-party entity has no probative value on whether TeamHealth defrauded United.
Magistrate Judge Poplin’s Ruling
Granted compulsion for United’s own corporate structure. Denied as to RFPs 48, 50, and 51 insofar as they sought Sound/other affiliated groups’ data: “does not make it more or less likely that Defendants violated RICO or upcoded.”
TeamHealth’s Objection:
Argued Magistrate applied overly strict relevance standard; comparator evidence is discoverable under broad Fed. R. Civ. P. 26(b)(1),
District Judge Corker’s Ruling
Broad: Anything “relevant to any party’s claim or defense” and proportional. Even broader historical view ecompasses info that “bears on, or that reasonably could lead to other matter that could bear on” issues. But not unlimited: No “fishing expeditions”; courts may limit overly broad/irrelevant requests.
Holding: Denied TeamHealth’s objection; upheld Magistrate in full.
Magistrate’s conclusion (data from Sound not relevant) was not clearly erroneous or contrary to law. Ruling found to be sound is an entity United “does not control.” Its coding data or structure would not reasonably lead to admissible evidence on TeamHealth’s alleged upcoding or RICO enterprise.
For the Parties:
The ruling limits TeamHealth’s ability to obtain comparator evidence from United-affiliated (but not controlled) providers. Discovery continues on other issues; trial date not yet set (dispositive motions were due ~March 2025 per earlier orders). Upcoding allegations are common defenses by payers against high-billing EM providers.
The case remains active; this is purely a procedural win for United on one discovery front. This ruling is narrow and deferential—typical for objections to magistrate discovery orders, which are overturned only rarely.
ZALMA OPINION
When dealing with attempted health insurance provider fraud resolution of discovery issues often resolves the entire case seeking damages for fraud or alleging RICO violations. The District Judge affirmed the Magistrate Judge’s ruling and limited the use of comparator billing as a defense to the claim of fraud.
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