A New York health insurer and a former top executive of its subsidiary agreed to pay up to $100 million to resolve a long-running whistleblower lawsuit alleging that the company defrauded Medicare by exaggerating how sick patients on its plans were.
The settlement viewed by Bloomberg News ends a 12-year legal battle by whistleblower Teresa Ross against New York insurer Independent Health Corporation, and its now-defunct subsidiary, DxID. Ross alleged the companies inflated payments in private Medicare Advantage plans by billing the government for illnesses that patients didn’t have.
The case helped put a spotlight on a growing area of enforcement for US regulators, who have tried to crack down on billing abuses in the fast-growing market for private Medicare plans.
The resolution “sends a clear message to the Medicare Advantage community that the United States will take appropriate action against those who knowingly submit inflated claims for reimbursement,” Deputy Assistant Attorney General Michael Granston said in a news release.
The parties didn’t admit to liability in the settlement. Buffalo, New York-based Independent Health said in a statement that the agreement will “avoid the further disruption, expense, and uncertainty of litigation in a matter that has lingered for over a decade.”
The settlement requires the company to pay the US government between $34.5 million and $98 million, depending on its financial performance in the coming years, plus interest. Betsy Gaffney, who ran the subsidiary alleged to be involved in submitting false diagnoses, will pay $2 million. Gaffney’s attorneys, in a statement, said she settled to avoid protracted litigation and didn’t admit any liability.
Ross, who was represented by the firm Whistleblower Partners LLP, will get 22.5% of the settlement proceeds for her role in bringing the allegations to light, a minimum payout of $8.2 million.
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