Amerigroup settles Illinois Medicaid complaint for $225 million

Chris Rizo Aug. 14, 2008, 12:20pm

Lisa Madigan (D)

SPRINGFIELD, Ill. (Legal Newsline)-Amerigroup Corp. has agreed to pay $225 million to settle fraud claims alleged by Illinois Attorney General Lisa Madigan and the U.S. government.

The health insurer was accused of excluding pregnant women and unhealthy patients in Illinois's Medicaid plan for the poor, which the state and federal government paid the company to operate.

"This settlement should send a clear message that the state of Illinois will not tolerate illegal conduct in the provision of healthcare for Illinoisans," Madigan said. "I am pleased that our work on this case will bring millions of dollars to the state of Illinois."

In addition to agreeing to the financial settlement, the Virginia Beach, Va.-based company has committed to enact corporate policies to prevent other discrimination in the future.

In October 2006, a federal grand jury found Amerigroup Corporation and Amerigroup Illinois, Inc. violated the U.S. False Claims Act and the Illinois Whistleblower Reward and Protection Act.

The jury in the case awarded the federal government and the state of Illinois $48 million in damages, which was automatically tripled under the state and federal statutes to $144 million.

Then, in March 2007, U.S. District Court Judge Harry Leinenweber imposed additional civil penalties of $10,500 on each of 18,130 false claims, for a total of more than $190 million, increasing Amerigroup's total liability to more than $334 million.

Amerigroup appealed the award to the 7th U.S. Circuit Court of Appeals. Amerigroup has agreed to drop the case as part of the settlement announced Thursday.

From Legal Newsline: Reach reporter Chris Rizo at

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