Confidential
Settlement – $9,250,000Facts
The defendant, Blue Cross of California (BCC), contracted with the government to act as a fiscal intermediary to
process and audit Medicare claims submitted by healthcare providers. The providers were required to submit
cost reports annually to BCC to ensure correct reporting of reimbursable items. The United States Government
relied on BCC to protect it against Medicare fraud. BCC was responsible for auditing cost reports and was
required to enter its audit start and completion dates into an audit-tracking database. The government then
relied on that data to evaluate BCCÆs performance and the renewal of its contract.
According to the defendant, BCC served as a fiscal intermediary for almost 40 years and
made the decision to leave the program in 2000, prior to learning of the investigation and
lawsuit. The defendant pointed out that the government did not require BCC to enter into a
corporate integrity agreement and did not preclude BCC or any of its affiliates from conducting
business with the federal or state governments.
Settlement Discussions
The parties settled for $9,250,000. Under the Federal False Claims Act (31 USC Sections 3729-3733), a whistleblower usually is entitled to receive 15 to 25 percent of the settlement proceeds.
Damages
The government and relator claimed that the defendants had submitted fraudulent claims from 1990 through Nov. 30, 2000. T
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