Seoul Medical Group Inc. and its subsidiary Advanced Medical Management Inc. will pay over $58 million to settle allegations they violated the False Claims Act.
Dr. Min Young Cha, the group’s former president and majority owner, will pay an additional $1.76 million.
The case centers on claims Seoul Medical submitted false diagnosis codes to the Medicare Advantage program, boosting government payments improperly.
California radiology group Renaissance Imaging Medical Associates Inc., which worked with Seoul Medical, has also agreed to pay $2.35 million for its alleged role in the scheme.
How the Medicare Advantage Program Works
Medicare Advantage, also known as Medicare Part C, allows seniors to receive care through managed care plans.
These plans receive a fixed monthly amount per patient from the federal government. Payments are adjusted based on each enrollee’s health status, using what’s known as a “risk score.”
- More serious health diagnoses = higher risk score
- Higher risk score = larger payment from the government
Healthcare providers who treat these patients receive payments from the insurance plans based on this model. This system is vulnerable if providers exaggerate or falsify diagnoses.
What Seoul Medical Group Allegedly Did
Between 2015 and 2021, Seoul Medical and Dr. Cha allegedly submitted false diagnoses for two specific spinal conditions:
- Spinal enthesopathy
- Sacroiliitis
According to federal officials, many patients did not suffer from these conditions, but the diagnoses led to higher payments from the Centers for Medicare & Medicaid Services (CMS).
In one case, when questioned by a Medicare Advantage plan, Seoul Medical reportedly asked Renaissance Imaging to produce radiology reports that supported the false diagnosis.
These inflated claims triggered larger government payouts to the Medicare Advantage plan, which then passed increased payments to Seoul Medical.
Whistleblower Initiated Investigation
The settlement stems from a whistleblower lawsuit filed by Paul Pew, the former CFO and Vice President of Advanced Medical Management.
He used the qui tam provisions of the False Claims Act, which allows private citizens to file suits on behalf of the US government.
The case is titled U.S. ex rel. Pew v. Seoul Medical Group, Inc., et al., filed in the Central District of California. Pew’s share of the settlement has not yet been announced.
What Officials Are Saying
Acting Assistant Attorney General Yaakov M. Roth emphasized the importance of integrity in the Medicare Advantage program:
“Today’s result sends a clear message to the Medicare Advantage community that the United States will zealously pursue appropriate action against those who knowingly submit false claims for taxpayer funds.”
Acting U.S. Attorney Joseph T. McNally added:
“As this settlement makes clear, we will diligently pursue those who defraud government programs.”
Deputy Inspector General Christian J. Schrank of the HHS-OIG highlighted the broader impact:
“Providers who game the Medicare program to increase profit undermine the foundation of care and diminish patient trust.”
How the Case Was Handled
The investigation and settlement involved several federal agencies:
- US Department of Justice, Civil Division
- US Attorney’s Office for the Central District of California
- Department of Health and Human Services, Office of Inspector General
The legal team included Fraud Section attorneys J. Jennifer Koh and Robbin O. Lee, and Assistant U.S. Attorney Karen Paik.
A Warning to the Industry
The government has made fighting healthcare fraud a top priority, using tools like the False Claims Act to pursue cases aggressively.
Officials are encouraging anyone with information about healthcare fraud to report it through the HHS tip line: 800-HHS-TIPS (800-447-8477).
Why This Case Matters
This settlement underscores growing scrutiny of Medicare Advantage billing practices.
As the program continues to expand—serving over 30 million Americans—federal oversight is ramping up.
Healthcare providers are now on notice: submitting false claims or misusing risk scores won’t be tolerated. And with whistleblowers playing a key role, the risks of getting caught are higher than ever.
- The claims resolved by the settlement are allegations only and there has been no determination of liability.
