By: Christopher Parrella, Esq., CPC, CHC, CPCO
Parrella Health Law, Boston, MA.
A Health Care Provider Defense and Compliance Firm.

The Department of Justice (DOJ) is investigating Semler Scientific, the manufacturer of QuantaFlo, for potential False Claims Act violations related to its use in diagnosing peripheral artery disease (PAD). The probe raises concerns over fraudulent billing practices tied to Medicare Advantage insurers, particularly UnitedHealth Group, which leveraged the test to obtain lucrative reimbursements from the federal government.

The DOJ Probe: Fraud in Medicare Risk Adjustment?

In a recent Securities and Exchange Commission (SEC) filing, Semler Scientific disclosed that the DOJ has been investigating the company since 2017, with increasing intensity in late 2024 and early 2025. The False Claims Act inquiry focuses on whether QuantaFlo diagnoses led to unwarranted Medicare Advantage payments, with allegations that insurers like UnitedHealth may have exploited the test to inflate reimbursements.

Semler briefly entered into settlement discussions with the DOJ on February 11, 2025, but cut off negotiations, signaling that it plans to “vigorously defend” itself against any charges.

How the Alleged Scheme Worked

The QuantaFlo test is a non-invasive PAD screening tool that uses infrared light sensors to detect reduced blood flow in the extremities. Cleared by the FDA in 2015, the device was never intended to be a standalone diagnostic tool, yet it became a major revenue driver for UnitedHealth and other insurers.

Here’s how the alleged scheme unfolded:

1. Insurers Used QuantaFlo to Diagnose PAD at Scale
   • UnitedHealth and other Medicare Advantage plans massively increased PAD diagnoses using QuantaFlo, often in home visits or clinics.
   • UnitedHealth’s HouseCalls program screened hundreds of thousands of patients using the device.
   • Many of these diagnoses were false positives or flagged early-stage diseases that did not require treatment yet still triggered Medicare risk adjustment payments.
2. The Medicare Reimbursement Windfall
   • Each PAD diagnosis reportedly generated approximately $3,000 per patient per year in Medicare payments.
   • From 2018 to 2021, UnitedHealth reportedly secured over $4 billion in Medicare reimbursements tied to QuantaFlo-based diagnoses.
   • Medicare Advantage patients were diagnosed with PAD at nearly four times the rate of patients in traditional Medicare, raising red flags about the legitimacy of the coding.
3. Industry Pushback and Government Concerns
   • Experts argue there is no evidence that the spike in PAD diagnoses improved patient care.
   • A 2023 letter from 19 former Medicare officials, physicians, and policy experts criticized Medicare’s risk adjustment process, calling it a system that allows insurers to set their own premiums by inflating diagnosis codes.
   • The Medicare Payment Advisory Commission (MedPAC) estimates fraudulent risk coding could cost taxpayers $50 billion in excess payments this year alone.
4. The DOJ Investigation: What Comes Next?

With settlement talks stalled, the DOJ is likely preparing False Claims Act charges against Semler and possibly its insurer clients, including UnitedHealth. If proven, Semler and participating insurers could face treble damages and massive financial penalties.

What This Means for Healthcare Providers and Insurers

The DOJ’s investigation underscores the increased scrutiny of risk-adjustment fraud in Medicare Advantage. Insurers and providers should take proactive steps to avoid similar legal exposure:

Audit Diagnostic Practices – Ensure all diagnoses and screening tools meet CMS clinical standards.

Verify Medical Necessity – Do not rely solely on AI-driven or device-based screenings without confirmatory testing.

Strengthen Compliance Programs – Implement strict oversight to prevent upcoding and risk adjustment abuse.

Prepare for DOJ Enforcement – Expect more aggressive action on fraudulent coding schemes in Medicare Advantage.

Protect Your Organization From Risk

If you are a healthcare provider, device manufacturer, or insurer, this case serves as a warning sign that DOJ enforcement is ramping up. Regulatory missteps can lead to multimillion-dollar liabilities.

At Parrella Health Law, we provide strategic legal defense, compliance audits, and risk mitigation guidance. If your organization is involved in Medicare Advantage risk coding, device-based screening, or regulatory compliance, NOW is the time to ensure your practices withstand DOJ scrutiny. Contact us today at 857.328.0382 or email Chris directly at cparrella@parrellahealthlaw.com

Don’t wait until an investigation begins—protect your business now.