Dr. Darren Sewell “bravely stepped forward to expose practices that were harming the Medicare program and jeopardizing patient care,” said an attorney who represented the Champion native in his whistleblower case against two Florida health care insurers.

“He did this at great personal risk to his career and his family’s livelihood,” said Timothy McCormack of the Constantine Cannon law firm.

Freedom Health and Optimum HealthCare, both based in Tampa, Fla., and operators of Medicare-managed health care insurance plans, have agreed to pay around $32 million to settle the 2009 whistleblower lawsuit prompted by Sewell, a 1993 Champion High School graduate.

The lawsuit accuses the companies of defrauding the government by overbilling Medicare and Medicaid by claiming patients were treated for conditions they did not have or underwent treatments they did not receive.

Sewell, who died in 2014, was a physician and former medical director at the two health plans, having worked for the two companies from 2007 to 2012. His complaint launched a government probe and undercover FBI investigation.

The recently unsealed federal lawsuit alleges Freedom and Optimum improperly gamed a feature of the Medicare Advantage program known as risk adjustment, or risk scoring, that allows Medicare to make additional payments to managed-care plans based on the plan members’ health risk scores that are calculated using patients’ medical diagnoses.

The complaint alleges Freedom and Optimum fraudulently inflated members’ risk scores and the corresponding risk adjustment payments received from the Centers for Medicare & Medicaid Services, which administers the programs, to allow them to expand their health insurance offerings into new counties in Florida and in other states by falsely representing they had a sufficient network of doctors, clinics, and hospitals available to serve their enrollees in the expanded service area, but there were no such networks in place.

Under the settlement agreements, the companies agreed to pay $31.7 million — $16.7 million to resolve the allegations of risk adjustment fraud and $15 million for the allegedly fraudulent expansion of their service areas.

Also, Siddhartha “Sidd” Pagidipati, Freedom’s former chief operating officer, agreed to pay $750,000 to resolve allegations regarding his role in the allegedly fraudulent expansion of Freedom’s and Optimum’s service areas.

Sewell rose through the ranks at Freedom and Optimum to become chief medical officer before transferring to the Medicare Revenue Management Department and assuming the role of vice president of special projects.

Sewell, his attorneys said, became familiar with the companies’ “various schemes to bilk money from Medicare and Medicaid” and played a significant role in the investigation.

After Sewell’s death, his brother, David Sewell, took on the mantle of whistleblower to pursue the case. As the whistleblower, Sewell’s estate is entitled to 15 to 25 percent of the $32.5 million recovered by the government.

Sewell’s estate is also represented by Mary Inman, a whistleblower attorney with Constantine Cannon, co-counsel Ned Arens and Stephen Hasegawa at Phillips & Cohen LLP, and Elaine Stromgren at James Hoyer.

“This is the largest whistleblower settlement involving health insurers’ manipulation of their members’ risk scores,” Inman said. “A $16.7 million recovery sends an important signal to health insurers that the government is serious about risk adjustment fraud. I wish my client were here to see it.”

vshank@tribtoday.com