Amerigroup Payment to End Lawsuit

By Tribune Reporter Ameet Sachdev Contributed To This Report., Chicago Tribune

Jul. 23–Amerigroup Corp., a manager of government health plans, agreed to pay $225 million to the U.S. and Illinois to settle a lawsuit alleging the company wrongfully denied coverage to pregnant women eligible for Medicaid.

The Virginia Beach, Va., company also will pay legal fees of $9 million and enter a corporate integrity agreement, it said Tuesday.

A federal judge in Chicago had ruled against Amerigroup in March 2007, awarding $334 million in the whistle-blower lawsuit. Medicaid is the joint U.S.-state program for the poor. The whistle-blower, who was in charge of government relations for the company in Illinois, filed the complaint in 2002.

The company will report a one-time charge for the settlement of approximately $199 million net of the estimated tax benefit, in the quarter that ended June 30, according to the statement. Amerigroup will pay the settlement from a fund that already had been set up. Excess funds will be available for corporate use.

Illinois paid Amerigroup a flat fee per insured person that accounted for some having more medical needs than others.

But Cleveland Tyson, former vice president of government relations at Amerigroup’s Illinois subsidiary, charged in a 2002 lawsuit that the company cherry-picked the healthiest patients to lower its costs. The Illinois attorney general and the U.S. attorney in Chicago later joined the whistle-blower suit as plaintiffs.

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