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The accord resolves allegations Amerigroup (NYSE: AGP | Quote | Chart | News | PowerRating) and its Illinois subsidiary routinely avoided enrolling pregnant women and unhealthy patients in their managed care program in Illinois, the U.S. Department of Justice and Illinois Attorney General Lisa Madigan said.
According to officials, the state and federal governments paid the company to operate a Medicaid managed care plan to provide health insurance to low-income people. Amerigroup was required by law to enroll all eligible beneficiaries but it avoided enrolling unhealthy patients, as well as pregnant women, who were more costly to treat, they alleged.
In a statement, James G. Carlson, chairman and chief executive officer of the Virginia-based Amerigroup, said the company is ending this litigation now "to remove a source of significant legal and financial uncertainty for our organization. With this matter resolved, we can concentrate fully on the business at hand -- meeting the health care needs of our members and continuing to serve our government partners."
A jury in October 2006 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 the company, which Amerigroup appealed to a federal appeals court in Chicago. As part of the settlement, Amerigroup is dismissing its appeal and entering into a "corporate integrity agreement" with the Office of Inspector General for the U.S. Department of Health and Human Services, the officials said.
"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, in a statement.
The agreement between Amerigroup and its subsidiary health plans and the Office of Inspector General requires the company to establish policies intended to prevent improper discrimination in its marketing and enrollment practices against beneficiaries in federal health insurance programs. The deal applies to Amerigroup's managed care plans in 11 states
A former Amerigroup employee, Cleveland Tyson, filed the original lawsuit against the company. He will receive $56.2 million from the settlement under the federal False Claims Act and the Illinois whistleblower law.
Some Amerigroup subsidiaries currently have Best's Financial Strength Ratings of C++ (Marginal) based on public data.
(By Fran Matso Lysiak, senior associate editor, BestWeek: fran.lysiak@ambest.com)
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