Health insurer paying feds, Illinois

Keith Loria Feb. 24, 2011, 3:26pm


CHICAGO (Legal Newsline) - Illinois Attorney General Lisa Madigan announced on Thursday that she has reached a $14.25 million settlement with Blue Cross Blue Shield of Illinois over allegations that the company defrauded the federal government.

The lawsuit against BCBS, a division of Health Care Service Corporation, alleged that it denied claims to patients based on more restrictive internal, undisclosed guidelines than the guidelines presented to patients.

The denials allegedly resulted in the cost of care being taken on by the state and federal Medicaid program at a cost of nearly $12 million.

The company allegedly denied patient claims for in-home, skilled nursing care for complex medical needs. The suit also alleged that, even during the claims review processes, BCBS fraudulently held that patients weren't covered for this care.

"Blue Cross Blue Shield's inappropriate denial of legitimate claims placed an undue burden on the state's finances," Madigan said. "My office is committed to holding health care insurers accountable on behalf of the people of Illinois for this type of deception and fraud."

Under terms of the agreement, BCBS must pay $14.25 million to the state of Illinois and another $9.5 million to the U.S. Treasury. That money will fund and reimburse Medicaid programs. The company is also required to pay $1.25 million to Illinois consumers who were denied by BCBS and did not receive coverage from Medicaid.

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