Horizon Health Insurer Agrees to $100M Settlement with New Jersey Over Alleged Overpayments

New Jersey Attorney General Matthew Platkin announced a landmark $100 million settlement with Horizon Blue Cross Blue Shield, accusing the state’s largest health insurer of overcharging the state’s public employee health plans for out-of-state medical claims.

“Today’s settlement makes a very clear statement: We send a message to Horizon and to the entire insurance industry that they cannot take advantage of the state,” Platkin declared during a press conference. “They cannot make us all illegally pay more for health care. No one is entitled to our business and they are not entitled to New Jersey taxpayer money either.”

While Horizon has agreed to the substantial payment, the company denies any wrongdoing as part of the settlement terms. The insurer’s relationship with New Jersey government entities is extensive – court documents revealed that over a 4½-year period, Horizon received $500 million in fees from New Jersey for administering the State Health Benefits Program and the School Employee Health Benefits Program. The company also manages health plans for local governments outside the state program and private businesses.

The exact amount Horizon overcharged remains unclear, though Platkin indicated it was “less than $100 million” and that the state is receiving “substantially more than we paid.” A 2022 Bloomberg report suggested the state overpaid by $18 million for just the top 50 out-of-state claims, while court documents reference “over a thousand false claims.”

Under the settlement agreement, Horizon’s current contracts with the state will remain intact provided the company fulfills the payment obligation. The timing is particularly significant as New Jersey’s public worker health plan faces insolvency, with officials desperately seeking savings. State authorities have described the local government portion of the health plan as being in a “death spiral,” with double-digit rate increases looming.

The dispute centers on Horizon’s alleged failure to honor the “lessor of” provision in its contract. According to Platkin, Horizon bid for the state contract in 2019 knowing it could not meet this requirement, and instead of declining to bid or disclosing this limitation, “lied” to secure the business.

One egregious example cited in court documents involved a plan member who sought treatment at New York Presbyterian hospital in 2020. While the hospital billed $674,856, Horizon requested – and the state paid – over $2 million, representing an overcharge of approximately $1.35 million.

State officials began investigating Horizon’s contract compliance in spring 2021, examining both the “lessor of” provision and whether the company was fulfilling a new contractual obligation to save money by directing patients to high-quality providers. Though an internal state complaint sought to recover $34 million related to the latter issue, Friday’s settlement permanently dismisses this internal complaint.

The settlement stems from the state’s intervention in a November 2021 lawsuit filed under the New Jersey and Federal False Claims Act by private citizens. The original complaint was filed by Chris Deacon, a former state Treasury official who had overseen the health plans, along with former top officials of the Policemen’s Benevolent Association and founders of health benefits consulting firm AVYM.

Horizon vigorously contested Platkin’s characterization of events, stating in a lengthy response to POLITICO that the Attorney General was “significantly mischaracterizing and distorting facts to falsely allege intentional wrongdoing” and “wasting time and taxpayer resources.” The insurer maintained that the settlement represented merely 0.46 percent of provider payments over the contract period.

“While Horizon’s interpretation of one aspect of the contract differed from the State’s, the settlement makes clear Horizon never retained any portion of monies charged to the State for healthcare provider claims,” the company stated. “Horizon paid claims we processed for the State according to the contracts in place with the doctors and hospitals filing those claims.”

Platkin responded sharply: “It’s rich that a company that has to pay $100 million back to the State is accusing the State of wasting time and resources. We look forward to receiving their payment within 25 days.”

Of the $100 million settlement, $78 million will go to the commissions overseeing the health plans, $12 million to the private citizens who filed the complaint (excluding Deacon, who is ineligible due to her former state position), and $10 million to New Jersey’s False Claims Prosecution Fund.

The settlement has already drawn criticism from public sector unions representing thousands of health plan members. New Jersey Education Association President Steve Beatty called for “much greater accountability for insurance companies like Horizon” and “a much deeper examination of the whole system.”

Deacon, the former state official who helped initiate the case, warned that the settlement should serve as a “wake-up call” about rising healthcare costs. “There are reasons costs are going up,” she said. “I would suggest this type of behavior is one of the causes.”