Amerigroup settles Medicaid case for $225 Mln

(RTTNews) - Health insurer Amerigroup Corp. (AGP | Quote | Chart | News | PowerRating) has agreed to pay $225 million to settle claims that it defrauded the Illinois Medicaid program, the U.S. Department of Justice and the Attorney General of Illinois said Thursday.

The agreement settles allegations that Virginia Beach, Virginia-based Amerigroup systematically avoided enrolling pregnant women and unhealthy patients in the Medicaid managed care health plans it was running in Illinois, which were meant 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 charged that Amerigroup avoided enrolling unhealthy patients as well as pregnant women because they were more expensive to treat and would have hurt its profit margins.

"A settlement of this magnitude sends the clear message that this office takes health care fraud very seriously," said Patrick 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 trial."

A jury found Amerigroup liable under federal and state law in October 2006, and 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.

Amerigroup will dismiss that appeal as part of today's settlement and has agreed to enter into a corporate integrity agreement with the Office of Inspector General for the U.S. Department of Health and Human Services.

The case stemmed from a whistleblower lawsuit filed by a former Amerigroup employee Cleveland Tyson, who will receive $56.25 million of the settlement under federal whistleblower law.

Amerigroup shares are currently trading at $25.50, down 37 cents or 1.43%.

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