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New Jersey has secured a landmark $100 million settlement from Horizon Blue Cross Blue Shield in what officials describe as the state’s largest-ever non-Medicaid False Claims Act settlement. The agreement resolves allegations that the insurance giant defrauded taxpayers by systematically overcharging for healthcare claims while administering state employee benefit programs.
Attorney General Matthew J. Platkin announced the settlement Friday, stating that Horizon Healthcare Services, Inc. fraudulently induced New Jersey to enter into a 2020 contract to manage the State Health Benefits Program and School Employees’ Health Benefits Program, then deliberately violated the contract terms.
“At a time when everyone is rightly concerned about the cost of their healthcare, it is simply unacceptable that an insurance company would seek to defraud our State and overcharge us while driving up the costs of healthcare for hundreds of thousands of dedicated public servants,” Platkin said in a statement.
The case centers on a cost-saving “lesser of” provision that New Jersey included in its 2019 contract specifications for third-party administrators. This provision required Horizon to charge the state the lower amount between a provider’s billed rate and the pre-negotiated rate between the provider and Horizon. For example, if a doctor charged $500 for a service but had negotiated a $1,000 rate with Horizon, the state should have paid only $500.
According to the complaint, Horizon knew before submitting its bid that it could not comply with this requirement. Internal company analysis had revealed that adhering to the provision would be problematic, yet executives proceeded with the bid anyway, securing a multiyear contract worth billions of dollars that included nearly $500 million in administrative fees.
State officials allege that once the contract began on January 1, 2020, Horizon submitted thousands of false claims and fraudulent documentation. The company also issued misleading Explanation of Benefits statements to state employees, misrepresenting how much the state was paying for their healthcare services.
New Jersey Treasurer Elizabeth Maher Muoio noted that Treasury’s Division of Pensions and Benefits has been investigating the matter since spring 2021. “The division has been, and continues to be, laser-focused on enforcing its contracts and ensuring that our health benefits plans and our members are protected,” she said.
The investigation gained momentum in November 2021 when private parties, known as relators, filed a lawsuit under the qui tam provisions of the New Jersey False Claims Act. These provisions allow private citizens to file lawsuits on behalf of the state for violations of the law and share in any recovery. While the federal government declined to pursue the matter, New Jersey continued its investigation.
As part of the settlement announced Friday, Horizon has agreed to stop the “lesser of” violations and cease issuing inaccurate EOBs. The company must also comply fully with this provision in its current contract, awarded in December 2023, which designates Horizon as co-administrator of the state’s health plans.
The settlement includes robust verification requirements, mandating that Horizon provide monthly, daily, and quarterly reports to confirm compliance. The company is also prohibited from engaging in any future violations of the New Jersey False Claims Act.
Of the $100 million settlement, New Jersey will pay $12 million to five of the six relators who filed the original complaint. This negotiated figure is below the statutory share typically awarded to whistleblowers, resulting in a larger recovery for the state. Officials specifically excluded former Division of Pensions and Benefits assistant director Christin Deacon from receiving any portion of this payment, noting she had become aware of the fraudulent conduct during her tenure as administrator for the 2020 contract.
Horizon’s role in New Jersey’s healthcare landscape is significant – the company provides coverage to more than three million residents, including approximately 750,000 active state employees, early retirees, and their family members. The company oversees billions in medical spending annually.
The $100 million payment is due to the state within 25 calendar days of the agreement’s effective date.
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10 Comments
I hope this settlement serves as a wake-up call for the healthcare industry. Overcharging and defrauding the public should have serious consequences. Curious to see if this case leads to any broader reforms or changes in how state healthcare programs are administered.
Healthcare costs are a major issue for many Americans, so it’s good to see authorities cracking down on insurance companies that are trying to game the system. $100 million is a significant amount, and I hope it helps offset the burden on taxpayers and public employees.
Agreed. Reducing waste and fraud in the healthcare system is crucial for keeping costs down and ensuring access to affordable coverage. This case highlights the importance of strong oversight and enforcement.
It’s concerning to hear about another major healthcare fraud case. $100 million is a substantial amount, so I’m glad the state was able to recoup those funds on behalf of taxpayers. Hopefully this sends a strong message to insurers that this type of behavior won’t be tolerated.
It’s unfortunate to see yet another major healthcare fraud case, but I’m glad the state was able to recover $100 million for taxpayers. Curious to learn more about the specific tactics Horizon used to overcharge the state and what steps they’ll take to prevent future abuse.
This case highlights the importance of government oversight and enforcement when it comes to managing public healthcare programs. Glad to see the New Jersey AG taking a strong stance against this type of fraudulent behavior by insurers.
Agreed. Taxpayers deserve transparency and fair pricing from companies managing state healthcare plans. Curious to see if this settlement sets a precedent for other states to crack down on similar practices.
This is a sizable settlement, and it’s good that the state is taking action to hold insurers accountable. Healthcare costs are a major concern for many families, so it’s important that companies managing public programs don’t try to inflate prices or engage in fraudulent behavior.
Absolutely. Oversight and transparency are crucial when it comes to public healthcare programs. Hopefully this case leads to stronger safeguards and more vigilant monitoring to protect taxpayers and patients.
Wow, $100 million is a huge settlement. It’s good to see the state taking action against healthcare fraud and holding insurers accountable for overcharging. Curious to learn more about the specifics of Horizon’s alleged contract violations and how they drove up costs for public employees.