In the second-largest Medicare contractor settlement to date, St. Louis-based General American Life Insurance Co. will pay $76 million to resolve whistleblower allegations that it failed to properly process claims and submitted false information to the Centers for Medicare and Medicaid Services, the U.S. Justice Department announced last week.
General American, now a subsidiary of New York-based MetLife, had been the Medicare Part B carrier for Missouri until Dec. 31, 1998, when it gave up the business. In that role the company made Medicare eligibility and coverage determinations and processed and approved claims for payment. Two former General American employees, whistleblowers Harry and Nancy Riggs, alleged in their 1999 False Claims Act suit that the company failed to report errors it identified in the quality assurance process and concealed its true error rate by deleting claims scheduled to be reviewed by a CMS regional office. The Riggses will receive 19%, or $14.4 million, of the settlement amount for reporting the fraud. The Riggses said the company hid the errors to improve and maintain its ranking among other national Medicare carriers, which are graded for accuracy and efficiency of processed claims. The whistleblowers said General American deleted claims scheduled for review that would have adversely affected its error rate and potentially cost it other Medicare business. In addition, the suit alleged the company hid, altered and falsified documents.
The strategy apparently worked for a while. After being ranked 38th among Medicare carriers in 1984, the company rose to No. 2 in 1986 after implementing the plan, according to government documents.
Assistant U.S. Attorney Robert McCallum Jr., head of the Justice Department's Civil Division, said in a written statement: "This settlement demonstrates the government's determination to combat healthcare fraud not only by providers but also by health insurers who submit false claims to Medicare."
"As today's $76 million settlement illustrates, the government expects absolute integrity on the part of both government contractors and healthcare providers," HHS Inspector General Janet Rehnquist said in a written statement. "Wrongdoers should expect that, taxpayers should demand that and beneficiaries should settle for nothing less."
MetLife spokesman John Calagna said the company did not admit legal wrongdoing in the settlement, which bars it from contracting with Medicare or Medicaid for five years-a moot issue because of the company's acquisition by MetLife 2000. "We're happy to put this behind us," Calagna said. He said MetLife had established reserves to cover the cost of the settlement.
General American is not the first Medicare carrier or fiscal intermediary to settle allegations that it defrauded the programs it was charged with protecting. Since 1993, 10 other Medicare contractors have settled, paying a total of $358.3 million. The largest settlement to date was with Health Care Services Corp., the parent company for Illinois Blue Cross and Blue Shield, which paid $140 million in 1998 to settle civil and criminal allegations that it defrauded Medicare and altered documents submitted to Medicare.