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Horizon Blue Cross Blue Shield of New Jersey has agreed to a landmark $100 million settlement with the State of New Jersey to resolve allegations of systematic fraud and overcharging, Attorney General Matthew J. Platkin announced. The settlement, the largest ever obtained under New Jersey’s False Claims Act outside the Medicaid program, concludes a wide-ranging investigation into the healthcare giant’s billing practices.
The settlement addresses claims that Horizon, which operates as New Jersey’s largest health insurer, fraudulently induced the state into awarding it a multi-billion-dollar contract to manage health benefits for public employees while knowingly overcharging for healthcare services.
“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 in a statement.
According to the unsealed complaint, Horizon violated multiple provisions of the New Jersey False Claims Act when it secured the 2020 third-party administrator contract to manage the State Health Benefits Program and the School Employees’ Health Benefits Program, which together provide coverage for approximately 750,000 public employees and their families.
The investigation centered on Horizon’s handling of the “lesser of” provision—a critical cost-control mechanism in the 2020 contract that required the company to charge the state the lower amount between what healthcare providers billed and pre-negotiated rates between providers and Horizon. State officials allege that despite promising compliance during the bidding process, internal company records showed Horizon knew it could not implement this provision but concealed this fact from state officials.
This deception allegedly resulted in thousands of false claims submitted between 2020 and 2025, with Horizon collecting nearly $500 million in third-party administrator fees during this period. The company also allegedly misrepresented payments in Explanation of Benefits documents sent to members.
The Division of Pensions and Benefits launched its own investigation in 2021 after discovering widespread discrepancies in billing. Though federal authorities declined to pursue the case, New Jersey filed its complaint in U.S. District Court alongside the settlement announcement.
Under the terms of the agreement, Horizon must pay the full $100 million to the state within 25 days and has committed to fully complying with the “lesser of” provision going forward. The settlement includes additional oversight measures through 2025, including monthly and quarterly verification reports to ensure ongoing compliance.
The state will distribute $12 million of the settlement to five whistleblowers who initially filed a qui tam lawsuit under the New Jersey False Claims Act. A sixth potential whistleblower, identified as a former state benefits official, was excluded from the award due to conflict of interest concerns and insufficient independent evidence beyond what the state had already uncovered.
Healthcare fraud experts note that this case highlights the growing scrutiny of third-party administrators in the healthcare industry, particularly when handling large government contracts. The settlement comes amid rising healthcare costs nationwide and increasing pressure on states to control spending on employee benefits programs.
Horizon Blue Cross Blue Shield of New Jersey remains one of the region’s dominant healthcare players, serving more than three million New Jersey residents. The company will continue as a co-third-party administrator under a contract awarded in December 2023, though now with enhanced oversight mechanisms.
The state’s legal team was led by Assistant Attorney General Lara J. Fogel, with support from the Division of Law’s Affirmative Civil Enforcement Practice Group and Financial Affairs Practice Group.
The settlement represents a significant recovery for New Jersey taxpayers and underscores the state’s commitment to aggressively pursuing healthcare fraud, particularly when it impacts public employee benefit programs.
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7 Comments
This is a concerning case that highlights the need for stronger regulation and enforcement in the healthcare sector. Taxpayers should be able to trust that their money is being used appropriately, not siphoned off through fraudulent practices.
Wow, $100 million is a huge penalty. It’s concerning to hear about the systematic fraud and overcharging, especially for public employee healthcare. Hopefully this serves as a deterrent for other insurers considering similar unethical practices.
Absolutely, this sends a strong message that such behavior will not be tolerated. The state needs to remain vigilant in monitoring healthcare costs and billing practices to prevent further abuse of the system.
This is a significant settlement, reflecting the serious nature of the alleged fraud and overcharging by Horizon. It’s good to see the state taking action to protect taxpayer dollars and ensure insurance providers are held accountable.
It’s disappointing to hear about this level of deception and abuse by a major insurer. While the $100 million settlement is significant, I hope the state also pursues measures to prevent similar incidents in the future and protect consumers.
As a taxpayer, I’m glad to see the state taking action to recoup funds lost to fraudulent practices. Healthcare costs are already a major burden, so it’s critical that insurers are transparent and accountable. This settlement is a step in the right direction.
I agree. The public deserves to know their tax dollars are being used responsibly. Hopefully this leads to reforms that improve oversight and accountability in the healthcare industry.