Calif. Blue Cross Settles Medicare Fraud Suit for $9.25 Million

Blue Cross of California and its parent company, Wellpoint Health Networks Inc., have agreed to pay $9.25 million to resolve a whistle-blower lawsuit accusing Blue Cross of defrauding the Medicare system, the U.S.Justice Department said Monday.

The alleged abuses occurred during the 1990s while Blue Cross was operating under contract with the federal government to process and audit Medicare claims in the state.

A former company auditor, joined by the Justice Department, accused Blue Cross of lying about how much time it spent auditing claims by hospitals and other medical providers.

One of the criteria used by the government to evaluate Blue Cross’ performance was how well it served as a government watchdog, spotting fraudulent claims.

“This settlement demonstrates that the government will continue to aggressively pursue health care fraud not only by providers, but also by intermediaries or other contractors who submit false or fraudulent information to Medicare,” said Assistant Atty. Gen. Robert McCallum.

In settling the lawsuit, Blue Cross admitted no wrongdoing.

“The company has always had comprehensive guidelines for ethical conduct and has consistently communicated to its associates and other constituents a strong commitment to ethical behavior at all levels,” Thomas Geiser, the company’s general counsel, said.

Geiser said Blue Cross sold off the unit that processed Medicare claims in 2000, before the lawsuit was filed.

“We cooperated fully with the government and decided to settle this matter to avoid prolonged litigation regarding a business we no longer operate,” he said.

The case was handled by the U.S. attorney’s office in Los Angeles and the U.S. Department of Justice.