Amerigroup settles for $225M in whistleblower Medicare fraud suit

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AmeriGroup pays largest settlement recorded for Medicare Fraud. Source: EverythingHealth  

Amerigroup has agreed to end a pending appeal and pay $225 million—of which $56 million will go to the suit’s whistleblower—to resolve claims that it defrauded the Illinois Medicaid program, according to the Department of Justice (DoJ).

The DoJ said that the settlement resolves allegations and subsequent findings by a federal jury and a judge, indicating that Amerigroup and its former Illinois subsidiary systematically avoided enrolling pregnant women and other high-risk patients in their managed care program in Illinois because they were more costly to treat.

The Virginia Beach, Va.-based payor was appealing a March 2007 judgment to pay $334 million. The current $225 million settlement, which replaces the previous judgment, remains the largest award in a federal healthcare fraud case in the Northern District of Illinois, according to Patrick J. Fitzgerald, U.S. Attorney for the Northern District of Illinois, Gregory K. Katsas, Assistant Attorney General for the Civil Division of the U.S. DoJ and Illinois Attorney General Lisa Madigan.

As part of the settlement, Amerigroup also has agreed to enter into a ‘corporate integrity agreement’ with the U.S. Health and Human Services Department's Office of Inspector General.

In March 2007, U.S. District Judge Harry Leinenweber imposed additional civil penalties of $10,500 on each of 18,130 false claims, for a total of more than $190 million, increasing Amerigroup’s total liability to $334.36 million.

The lawsuit against Amerigroup was initially filed in 2002 by Cleveland Tyson, Amerigroup Illinois’ former head of government relations. As a result of the settlement, Tyson will receive $56.25 million. 

The DoJ noted that the settlement “is neither an admission of liability by Amerigroup nor a concession by the United States and state of Illinois that their claims lack any merit. Rather, the agreement states that the parties settled to avoid the delay, uncertainty and expense of further litigation.”

Amerigroup operates plans in 11 states with a combined enrollment of almost 1.7 million members.