Jeffrey Mazik is the former “Senior Practice Leader for Kaiser’s National Compliance Office” and has over 25 years of experience in fraud control, auditing, and compliance. He was “employed by Kaiser” from 2008 to 2017, joining as an “Information Technology Audit Specialist” in May 2008 and transitioning to the role of “Senior Practice Leader in the Fraud Control Program” in March 2012.
His duties included working with regional compliance leadership to implement compliance and fraud control initiatives, using data analytics to improve compliance and fraud-mitigation initiatives, investigating potential fraud, and developing corrective action plans to address fraud risks.
He has filed federal lawsuit in the United States District Court tor the Eastern District of California against Kaiser Foundation Health Plan, Inc. (“KFHP”), Kaiser Foundation Hospitals (“KF Hospitals”), The Permanente Medical Group, Inc., Southern California Permanente Medical Group, and Colorado Permanente Medical Group, P.C. (“the PMG defendants”). The PMG defendants are groups of physicians that “contract with the other Kaiser entities” to provide medical services Each PMG defendant operates within its individual territory and is funded primarily by reimbursements from its respective regional Kaiser Foundation Health Plan entity.
Defendant KF Hospitals is a nonprofit corporation headquartered in California that operates hospitals and provides facilities for the benefit of the PMG defendants. (Id.) It also receives its funding from defendant KFHP. (Id.) Defendant KFHP is a nonprofit corporation headquartered in California that enrolls members in health plans and provides medical services for its members through contracts with defendant KF Hospitals and the PMG defendants.
On April 2, 2021 Mazik filed his operative first amended complaint under seal on behalf of the United States of America and the states of California, Colorado, Georgia, Hawaiʻi, Maryland, Virginia,, and Washington pursuant to the federal False Claims Act,
He alleges defendants have schemed to defraud the federal government by allowing external, i.e., “non-Kaiser,” healthcare providers to submit false diagnosis codes, which defendants in turn submit to CMS in order to inflate their capitation rates. In particular, defendants intentionally fail to properly use fraud-detection tools to monitor claims errors. Defendants contract with data analytics vendors to review their external provider claims for each region. The vendors provide software applications that perform various types of reviews. For instance, some programs”detect claims that are incorrectly billed . . . [while] other programs identify intentionally manipulated claims that technically fall within plan rules . . . .”
However, he alleges defendants intentionally misused these programs and used them at minimum capacity, such as by disabling key features, in order to reduce the chances of detecting claims errors. In this way, defendants were actively working to avoid detecting and correcting fraudulent claims.
In late 2015, Mazik was tasked with comparing the functionalities offered by two claims analytics vendors, McKesson and Verisk, with which defendants routinely contracted. McKesson offers auditing software called ClaimsXten that detects fraudulent billing practices using “a robust set of rules.” However, defendants chose to deactivate 25 of the 54 rules used by ClaimsXten – “the principal software program that they were supposedly relying on [to] detect such billing fraud.” When a group of employees including Mazik used a Verisk program to double-check data from “the Georgia region” produced by ClaimsXten, the group found $5.3 million in overpayments stemming from defendants’ decision to deactivate nearly half the rules in ClaimsXten. Defendants neither reactivated the disabled rules nor rectified the $5.3 million in overpayments.
When Mizak audited regional office claims from August 2010 through July 2016, he discovered that inflated diagnosis codes caused $209 million in Medicare Advantage overpayments, $181 million in Medi-Cal overpayments and $181 million in other Medicaid programs.Additional allegations similar to the above were made in the lawsuit, and Mazik claims that ultimately he was “stripped of his duties and responsibilities” On January 5, 2017, Mazik was fired.
On July 13, 2022, defendants filed their motion to dismiss Mazik’s First Amended Complaint. In their pending motion, defendants argued that Mazik’s federal FCA claim is barred by the first-to-file rule and the first amended complaint filed by the relator, Dr. James Taylor, in United States ex rel. Taylor v. Kaiser Permanente, No. 21-cv-03894-EMC (N.D. Cal.) (“the Taylor Complaint”). The Court compared the allegations in both cases and concluded that Mazik’s FCA claim was barred by the first-to-file rule except to the extent relator alleges that defendants deliberately tampered with compliance software to ensure that it did not identify erroneous diagnosis codes.
And on February 13, 2024 the Court issued its ruling granting in part and denying in part the Motion to Dismiss. Thus parts of the Mazik case will proceed, and there is additionally the Taylor case proceeding in another California Federal District Court based upon similar allegations.