Two insurance companies that are part of one of the largest providers of automobile insurance in the United States have agreed to pay more than $2 million to resolve allegations that they violated the False Claims Act by causing Medicare and Medicaid to pay for claims for which the companies were responsible, Acting U.S. Attorney William E. Fitzpatrick announced today.
Progressive Casualty Insurance Co., of Cleveland, Ohio, and Progressive Garden State Insurance Co., of West Trenton, New Jersey, are part of the Progressive Group of Insurance Companies, one of the nation’s largest auto insurance providers.
If an individual has Medicare or Medicaid and other private health insurance coverage, each type of coverage constitutes a “payer.” The insurance coverage that pays first, referred to as the “primary payer,” typically pays to the limits of its coverage for an individual’s health care claims. Generally, if there are health care costs that the primary payer does not cover, these costs may then be paid by the individual’s other insurance coverage, referred to as the “secondary payer.”
Under federal and New Jersey state law, if an individual has both private insurance and Medicare or Medicaid, neither Medicare nor Medicaid may serve as the primary payer for certain claims and the private insurer must remain as the primary payer.
According to the allegations in this case, under “health first” automobile insurance policies that it offered, Progressive designated the policyholder’s health insurance carrier as the primary payer for medical claims that arose in connection with an automobile accident. Even though, under the law, Progressive could not decline to make primary payment to Medicare or Medicaid beneficiaries, the company permitted Medicare and Medicaid beneficiaries to elect a “health first” policy.
Many of these policyholders in New Jersey who were Medicare or Medicaid beneficiaries incurred medical claims in connection with an automobile accident. Because Progressive’s “health first” policies designated the company as the secondary payer, Medicare and Medicaid improperly paid for claims that Progressive should have paid.
The United States and New Jersey alleged that this conduct violated the Medicare Secondary Payer Act and Medicaid regulations and, as a result, Progressive caused false claims to be submitted to Medicare and Medicaid.
The allegations were raised in a lawsuit filed under the qui tam, or whistleblower, provisions of the False Claims Act. The act allows private citizens with knowledge of fraud to bring civil actions on behalf of the government and to share in any recovery.
The whistleblower will receive more than $600,000 of the more than $2 million that the United States and New Jersey recovered.
The settlement is the culmination of an investigation conducted by special agents of the U.S. Department of Health and Human Services – Office of the Inspector General, under the direction of Special Agent in Charge Scott J. Lampert.