Amerigroup Settles Federal and State Medicaid Fraud Claims for $225 Million

2008-08-14 11:27:00

    WASHINGTON, Aug. 14 /EMWNews/ -- Amerigroup Corporation

has agreed to pay $225 million to resolve claims that it defrauded the

Illinois Medicaid program, the Justice Department and the Attorney General

of Illinois announced today. Amerigroup, which is headquartered in Virginia

Beach, Va., operates managed health care plans throughout the United


    Today's settlement resolves allegations that Amerigroup and its

Illinois subsidiary systematically avoided enrolling pregnant women, and

unhealthy patients in their managed care program in Illinois. Amerigroup

was paid by the United States and the state to operate a Medicaid managed

care health plan in Illinois to provide health care to low income people.

Amerigroup was required by law to enroll all eligible beneficiaries. The

United States and the state of Illinois brought claims against the company

alleging that it violated this requirement and avoided enrolling unhealthy

patients, as well as pregnant women, who were more costly to treat and

would have eroded Amerigroup's profit margin.

    In October 2006, a jury found Amerigroup liable under the federal False

Claims Act and the Illinois Whistleblower Reward and Protection Act. The

court entered a $334 million judgment against Amerigroup, which then filed

an appeal with the U.S. Court of Appeals for the Seventh Circuit in Chicago

seeking a reversal of the judgment. As part of the settlement, Amerigroup

will dismiss its appeal and has agreed to enter into a Corporate Integrity

Agreement (CIA) with the Office of Inspector General for the U.S.

Department of Health and Human Services (HHS).

    "The Justice Department is committed to ensuring that recipients of

federal health care funds adhere to the law, so that appropriate health

care services are provided to all eligible patients," said Gregory G.

Katsas, Assistant Attorney General for the Civil Division.

    "A settlement of this magnitude sends the clear message that this

office takes health care fraud very seriously," said Patrick J. Fitzgerald,

U.S. Attorney for the Northern District of Illinois. "This case also

illustrates the perils a defendant faces in taking a case such as this to


    "This settlement should send a clear message that the state of Illinois

will not tolerate illegal conduct in the provision of healthcare for

Illinoisans," said Illinois Attorney General Lisa Madigan. "I am pleased

that our work on this case will bring millions of dollars to the State of


    The CIA between Amerigroup and its subsidiary health plans and the

Office of Inspector General requires the company to adopt policies and

procedures, and a code of conduct designed to prevent improper

discrimination against federal health care program beneficiaries in its

marketing and enrollment practices. The CIA applies to Amerigroup's managed

care plans in all the states - currently 11 - in which the company does

business during the term of the agreement. In addition, Amerigroup must

hire an independent organization to annually review its marketing practices

and enrollment initiatives, and its board of directors must certify the

effectiveness of its compliance program each year.

    "The Office of Inspector General is committed to protecting Medicaid

beneficiaries from fraud and discrimination" said HHS Inspector General

Daniel R. Levinson. "This Corporate Integrity Agreement will help ensure

that our most vulnerable beneficiaries have access to needed Medicaid HMO

plans in the future."

    The lawsuit against Amerigroup was originally filed by Cleveland Tyson,

a former company employee. Under the federal False Claims Act and the

Illinois Whistleblower Reward and Protection Act, a private party, known as

a relator, is entitled to file suit alleging fraud on behalf of the federal

or state government, respectively, and receive a share of any recovery. As

a result of today's recovery, Tyson will receive $56.25 million.

    The case was handled by the U.S. Attorney's Office for the Northern

District of Illinois and the Illinois State Attorney General's Office, with

assistance from the Justice Department's Civil Division and the Office of

Inspector General for HHS, as well as by private counsel for the relator.

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