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Horizon Blue Cross Blue Shield to Pay $100 Million in Historic Settlement with New Jersey
New Jersey’s largest health insurer has agreed to pay the state $100 million to settle allegations of systematic overcharging and contract violations. Attorney General Matthew J. Platkin announced Wednesday that Horizon Healthcare Services, Inc., operating as Horizon Blue Cross Blue Shield of New Jersey, will make the payment to resolve claims that it fraudulently induced the state to enter into a 2020 contract to administer employee benefit programs.
The settlement, described as New Jersey’s largest-ever non-Medicaid False Claims Act settlement, comes after a lengthy investigation that revealed Horizon knowingly violated a key cost-saving provision in its contract with the state.
“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,” said Attorney General Platkin.
The case centers on a 2019 bidding process for a third-party administrator contract to manage benefits for the State Health Benefits Program and the School Employees’ Health Benefits Program. For the first time, the state included a “lesser of” provision in the contract requirements—a mechanism designed to ensure cost savings.
Under this provision, Horizon was required to charge the state the lower amount between the provider’s charge and any pre-negotiated rate between Horizon and the provider. For example, if a healthcare provider charged $500 for a service, but Horizon had negotiated a $1,000 rate with that provider, the company was obligated to bill the state only $500.
According to the state’s complaint, Horizon executives knew before bidding that they could not comply with this requirement. Internal analysis showed the company would be unable to meet the “lesser of” provision, yet executives proceeded with the bid anyway, securing a multiyear, multibillion-dollar contract that generated nearly $500 million in administrative fees over four and a half years.
State Treasurer Elizabeth Maher Muoio praised the diligence of investigators, noting, “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.”
The investigation began in April 2021 when the Division of Pensions and Benefits, in consultation with the Treasurer’s Office, started examining whether Horizon was violating its contractual obligations. Later that year, private parties filed a lawsuit under the qui tam provisions of the New Jersey False Claims Act, which allows individuals to file lawsuits on behalf of the state and share in recoveries.
While the federal government declined to pursue the matter, New Jersey filed its own complaint alleging violations of the state’s False Claims Act, including fraudulent inducement, presentment of false claims, and presentment of false records or statements. The complaint also included claims for breach of contract and unjust enrichment.
As part of the settlement, Horizon has agreed to stop the “lesser of” violations and cease issuing inaccurate Explanation of Benefits (EOBs) to health plan members. The company must now fully comply with the provision in its current contract, awarded in December 2023, and submit various verification reports to demonstrate compliance through December 2025.
Of the $100 million settlement, the state agreed to pay $12 million to five of the six relators who filed the qui tam complaint. The state declined to provide any portion of this payment to Christin Deacon, a former Assistant Director of Health Benefits who had become aware of the fraudulent conduct during her tenure at the Division of Pensions and Benefits.
Horizon Blue Cross Blue Shield provides healthcare coverage to more than three million New Jersey residents, including approximately 750,000 active state employees, early retirees, and their family members. The company oversees billions of dollars in medical spending annually, making this settlement a significant accountability measure in the healthcare industry.
The payment is expected to be made within 25 days of the settlement’s effective date.
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16 Comments
Horizon is one of the largest insurers in New Jersey, so this case highlights the need for strong oversight and accountability, even for major industry players. It’s good to see the state taking such aggressive action to recoup funds and send a message about the consequences of fraudulent behavior.
Absolutely. When even the biggest players can’t get away with these kinds of practices, it demonstrates the state’s commitment to protecting consumers and taxpayers. Hopefully this serves as a deterrent for other insurers who may be tempted to engage in similar misconduct.
This is an important win for the state and taxpayers. Healthcare costs are a major burden, so any efforts to rein in fraudulent or abusive practices by insurers are welcome. Hopefully this case leads to reforms that better protect consumers and ensure more accountability.
Absolutely, healthcare affordability is such a critical issue. Rooting out fraud and overcharging by insurers is an important part of the solution. Hopefully this sets a precedent for more aggressive enforcement in this space.
Wow, $100 million is a massive settlement. I’m curious to learn more about the specific details of how Horizon was overcharging and violating the contract terms. It would be helpful to get a better understanding of the scale and nature of their misconduct.
Yes, the scale of this settlement is quite remarkable. I agree, more transparency around the investigation findings would be useful to fully grasp the extent of Horizon’s wrongdoing and whether there are broader issues in the industry that need to be addressed.
I’m glad to see the state taking such strong action against Horizon for these alleged violations. Healthcare costs are a major concern for many families, so it’s important that insurers are held accountable when they try to defraud the system. Hopefully this case leads to broader reforms to improve transparency and accountability in the industry.
Absolutely. Cracking down on fraudulent behavior by insurers is an important step in making healthcare more affordable and accessible for everyone. This should serve as a wake-up call for the industry to clean up its practices and put the needs of consumers first.
I’m curious to know if this was an isolated incident or if there are broader systemic issues at Horizon or in the industry more broadly. Overcharging and contract violations of this magnitude suggest a need for stronger regulatory oversight and enforcement measures.
That’s a good point. One settlement, even a large one, doesn’t necessarily mean the problem is fully resolved. Regulators should dig deeper to understand if this was an isolated lapse or indicative of more pervasive issues that require comprehensive reforms.
This seems like a concerning case of fraud and overcharging by a major health insurer. I’m glad the state was able to recover $100 million through this settlement, but it’s troubling that this kind of behavior was apparently happening. Hopefully this serves as a wake-up call and leads to greater oversight and accountability in the industry.
Absolutely, it’s critical that insurance companies are held accountable when they try to take advantage of consumers or government programs. This sends a strong message that this kind of misconduct won’t be tolerated.
While the $100 million settlement is substantial, it’s concerning to hear that this was the largest non-Medicaid False Claims Act settlement in New Jersey history. This implies that questionable billing practices may be more common than we’d like to believe across the insurance industry.
Exactly. The fact that this represents the state’s largest non-Medicaid fraud settlement is quite alarming. It suggests a need for greater scrutiny of insurance industry practices and tougher penalties to deter this type of misconduct in the future.
This is an important win for New Jersey, but I wonder if the $100 million settlement is enough to truly address the scale of Horizon’s alleged misconduct. Healthcare costs are a major burden, so any efforts to rein in fraudulent or abusive practices by insurers are critical.
That’s a fair point. While the settlement is substantial, it’s hard to know if it fully compensates for the harm caused by Horizon’s actions. Ongoing monitoring and enforcement will be key to ensuring this isn’t just a one-off penalty, but part of a broader effort to clean up problematic practices in the industry.