Monday, August 18, 2008

Insurer to pay $225M settlement in Medicaid coverage-denial suit

The Kaiser Network has picked up on a report from Reuters that Amerigroup has settled a qui tam whistleblower suit in which it was accused of denying coverage to Medicaid beneficiaries who were pregnant or had health problems. (Under the law, Amerigroup was obligated to provide coverage for a Medicaid enrollees.)

Amerigroup claims its enrollment practices were intended to meet the objections of state officials that it was enrolling too many women who were late in their pregnancies. A jury rejected that claim and found instead that the insurer had engaged in systemic and wide-ranging fraud. The settlement occurred while Amerigroup's appeal from the 2006 judgment for $334 million was pending. The qui tam relator, former Amerigroup employee Cleveland Tyson, will walk away with a cool $56.3 million, his share of the recovery under the federal civil False Claims Act.

Forget the legal niceties for just a moment. Set aside the company's self-serving statements about needing to put this matter behind them and to move for the good of the company and its shareholders. And postpone thoughts that this sorry episode is a staggering example of the internal conflict of interest that plagues all health insurers.

Think instead of the extent of the human misery Amerigroup caused by denying coverage under this corporate policy. After the judgment was reduced by $109 million as a result of the settlement, it was still the largest health fraud recovery in Illinois' history (see Ill. AG's news release), and deservedly so.
posted by Tom Mayo, 10:29 AM

Health care law (including public health law, medical ethics, and life sciences), with digressions into constitutional law, poetry, and other things that matter