'Cheating can be disastrous'

HMO owes $334 mil. for avoiding insuring pregnant women

March 14, 2007

BY NATASHA KORECKI Federal Courts Reporter

http://www.suntimes.com/news/metro/295923,CST-NWS-preg14a.article

A onetime Illinois HMO was hammered with a $334 million judgment Tuesday, the largest of its kind ever in northern Illinois and an amount almost equal to the company's profits since it was founded.

U.S. District Judge Harry Leinenweber added a $190 million penalty on top of an October $144 million jury verdict against Amerigroup Illinois and Amerigroup Corp. for purposely not insuring "unhealthies" and women in late-term pregnancies.

The resulting $334 million judgment is the largest ever in a health care fraud case within the Northern District of Illinois and the fifth largest nationally in 2006.

Illinois had hired Amerigroup to offer Medicaid to the poor.

Appeal planned

A federal jury last October found Amerigroup liable for defrauding the Medicaid program.

The case, brought by a civil whistleblower and then joined by federal authorities and the state attorney general's office, charged that Amerigroup cherry-picked "healthies" and purposely avoided women in their third trimester of pregnancy because they cost more to insure.

The government paid Amerigroup based on the number of people it enrolled.

It no longer does business in Illinois but does so in 10 other states.

"Amerigroup strongly disagrees with this decision and will aggressively pursue an appeal," Amerigroup CEO Jeffrey L. McWaters said.

Amerigroup spokesman Kent Jenkins Jr. called the total damages "egregious and out of proportion" to the charges.

The verdict nearly equals the $384 million in profit that Amerigroup has made since it was founded in 1994, Jenkins said.

Amerigroup earned $15 million in profit in a three-year period at issue during the trial, according to Jenkins.

In his written opinion, Leinenweber said Amerigroup "pilfered money from Medicaid coffers to pad its own pockets."

Won't go out of business

Trial testimony contended that executives within Amerigroup set up a strategy to avoid enrolling women in their third trimester of pregnancy because they would cost more to insure.

From 2000 to 2004, $243 million in taxpayer money went to Amerigroup to set up a Medicaid managed care health plan for low income residents including pregnant

women who had inadequate or no prenatal care. Government officials say Amerigroup instead was motivated by greed.  Amerigroup countered that it was open about its practice with state officials and provided adequate care.

If an appeals court upholds the judgment, the company won't go out of business because of credits and loans the company has secured, Jenkins said.

"We'll open our doors tomorrow morning and will do business as we did today," Jenkins said Tuesday.

Whistleblower Cleveland Tyson of Buffalo Grove, former vice president of government relations, will get 15 percent to 25 percent of the total award -- a benefit allowed under the Fraud Claims Act, designed to encourage whistleblowers.

Tyson lawyers David Chizewer and Fred Cohen said Leinenweber's order sends a strong message:

"Judge Leinenweber was telling Amerigroup and every other company that cheating the government can be disastrous," Cohen said.

nkorecki@suntimes.com