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Editor: Katharine Van Tassel
Akron Univ. School of Law

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Friday, August 15, 2008

Amerigroup to Pay $225 Million to Settle Case

The Wall Street Journal reports that state and federal prosecutors said Thursday, August 14, 2008, that Amerigroup Corp. has agreed to pay $225 million to settle claims that it defrauded the Illinois Medicaid program.  Brent Kendall writes,

Amerigroup_corpThe federal government and the state of Illinois alleged that Amerigroup systematically avoided enrolling pregnant women and unhealthy patients in their Medicaid managed-care program in Illinois, which served low-income people.

By law, prosecutors said, Amerigroup was required to enroll all eligible beneficiaries.

A former Amerigroup employee was the first to file charges against the company, alleging that, in a bid to maximize profits, Amerigroup engaged in a calculated plan to discriminate against Medicaid-eligible patients with expensive medical conditions. Government lawyers later intervened in the whistleblower's case.

The whistleblower, Cleveland Tyson, will receive $56 million, a 25% share of the settlement.

Denying the charges, Amerigroup said it adopted its enrollment policies in response to state officials who expressed concern that the company was enrolling too many women who were late into their pregnancies.

An Illinois jury entered a $334 million judgment against Amerigroup in 2006, but the company, backed by insurance and business groups, filed an appeal.

Thursday's settlement, which formalizes an agreement reached on July 22, ends the case and in essence gives Amerigroup a 33% discount on the jury verdict.

Amerigroup Chairman James G. Carlson said the company settled the case to remove significant legal and financial uncertainties.

"Our responsibility to our shareholders, associates, members, providers and government partners is to close this chapter now and move toward the future," Mr. Carlson said.

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