FHP, a subsidiary of Fountain Valley, Calif.-based FHP International Corp., agreed to pay $12 million to resolve a claim that the HMO overcharged the federal government for the care of federal employees.
The claim arose from an Office of Personnel Management audit that found FHP had overcharged the government $15 million in Federal Employees Health Benefits Program contracts from 1987 to 1991. The contracts require HMOs to charge the government no more than they charge other customers in the same region.
FHP has reserved $45 million to cover this and other possible claims. FHP was not assessed fines or penalties as part of the agreement.
Cypress, Calif.-based PacifiCare Health Systems, which plans to acquire FHP, is negotiating with the federal government over a similar claim and has reserved $25 million.