U.S. JOINS SUIT AGAINST PENNSYLVANIA INSURANCE COMPANY
WASHINGTON, D.C. The United States has partially intervened in a qui
tam or whistleblower suit brought against a Pittsburgh insurance company
alleging that the firm caused the filing of false Medicare claims, the
Department of Justice announced today. Highmark, Inc. is alleged to have
knowingly underpaid the amounts due for care of certain Medicare beneficiaries
under employer group health plans insured or administered by the company.
Highmark is a private insurance company that provides health insurance to
individuals covered under various employer group health plans. The company
also acts as the administrator for other self-insured plans, processing claims
and making claims payment determinations. In addition, Highmark has
subsidiaries that contract with the Department of Health and Human Services
(HHS) to process Medicare claims.
In September, 1998, Highmark paid $38.5 million to settle claims that its
corporate predecessor, Pennsylvania Blue Shield, violated the False Claims Act
by obstructing Medicare audits of the company’s performance as a federal
health care program contractor by failing to properly process claims or
recover overpayments and also failing to properly screen certain Medicare
claims before payment.
The suit, originally filed by Elizabeth Drescher, an employee of Highmark,
alleged that she was directed in early 1996 to oversee the company’s
compliance with a 1995 agreement between the government and a number of Blue
Cross and Blue Shield plans, including predecessors of Highmark, regarding the
manner in which they processed what are known as Medicare Secondary Payer
(MSP) claims. Those are claims for certain Medicare beneficiaries where
employer group health plans, not Medicare, are responsible for the primary
payment of the claims, and Medicare is merely the secondary payer, paying for
such items as deductibles not covered by the private insurance. The settlement
was intended to address situations where Blue Cross and Blue Shield plans
improperly underpaid the claims of Medicare beneficiaries and contained
procedures aimed at avoiding similar problems in the future. Ms. Drescher’s
duties evolved into oversight of Highmark’s MSP compliance generally.
The suit alleges that concerns about Highmark’s MSP compliance were widely
known within the company. According to the relator’s suit, a Highmark Senior
Vice President in September 1998 presented the problems with MSP compliance
and estimates of potential liability to the company’s executive committee,
including the chief executive officer of the company. The company reportedly
estimated its MSP liability at that point were in excess of $20 million.
After announcing that it would fix the problem, Drescher says the company
demoted her and removed her from all responsibility for MSP matters. She
subsequently filed suit against the company on behalf of the United States.
The government intends to file an amended complaint against defendant
The case is entitled United States ex rel. Drescher v. Highmark, Inc., et
al., Civ. No. 00-CV-3513 (E.D. Pa.).