Progressive Insurance Company Settles Medicare and Medicaid Secondary Payer False Claims Act for $2.4 Million

Posted by Rafael Gonzalez on Nov 22, 2017 9:12:10 AM

Auto, liability, no-fault, and work comp primary payers- if you didn’t take Medicare and Medicaid secondary payer issues seriously before, here are over 2 million reasons why you should.

On November 14, 2017, the United States of America, the State of New Jersey, Progressive Garden State Insurance Company, Progressive Casualty Insurance Company, and Relator Elizabeth Negron entered into a settlement agreement for $2,392,700 on a False Claims Act matter in which certain Progressive automobile insurance policies caused health care providers to submit medical claims to Medicare and Medicaid in violation of secondary payer laws.

Progressive Insurance company settles medicare and medicaid secondary payer false claims act for $2.4 million

 

Qui Tam False Claims Action

On January 28, 2014, the Relator filed a qui tam action in the United States District Court for the District of New Jersey pursuant to the qui tam provisions of the False Claims Act, 31 U.S.C. § 3730(b), and the New Jersey False Claims Act, N.J. Stat. Ann. § 2A:32C-1, et seq. (“Civil Action”). The Civil Action alleged that Progressive allowed Medicare and Medicaid beneficiaries to select a “health first” automobile insurance policy that caused health care providers to submit medical claims to Medicare and Medicaid in violation of secondary payer laws.

The United States and New Jersey contended that Progressive caused to be submitted claims for payment to the Medicare Program, Title XVIII of the Social Security Act, 42 U.S.C. §§ 1395-1395kkk-1 (“Medicare”) and the Medicaid Program, Title XIX of the Social Security Act, 42 U.S.C. §§ 1396-1396w-5, N.J. Stat. Ann. § 30:4D-1, et seq., and Family Health Care Coverage Act, P.L. 2005, c. 156 (“Medicaid”) during the period from March 19, 2009, through January 26, 2017.

Designating Medicare and Medicaid as Primary Payers

Specifically, the United States and New Jersey contended Progressive offered automobile insurance policyholders (“Auto Policyholders”) “health first” insurance policies which designated the Auto Policyholder’s health insurance carrier, sometimes Medicare or Medicaid, as the primary payer for medical claims that arose in connection with an automobile accident. In other words, Progressive permitted Auto Policyholders in New Jersey, including policyholders who either were Medicare and Medicaid beneficiaries at the time the policy was issued or later became Medicare or Medicaid beneficiaries, to designate these as primary payers while their Progressive policy was in force. Under the Medicare Secondary Payer Act, 42 U.S.C. § 1395y, et seq., and Medicaid regulations, 42 C.F.R. § 433.135, et seq., it is impermissible for policies to designate Medicare or Medicaid as the primary payer for automobile, liability, no-fault, or work comp accident-related medical claims.

Knowingly Caused False Claims to be Submitted to Medicare and Medicaid

Many of these Auto Policyholders in New Jersey were Medicare or Medicaid beneficiaries and incurred medical claims in connection with an automobile accident. Because of the “health first” Progressive insurance policies, which designated Progressive as the secondary payer, Medicare and Medicaid were billed and improperly paid for claims for these policyholders that Progressive should have paid. This occurred in a variety of ways: (1) when medical claims were submitted to Progressive for payment and Progressive either denied or failed to pay the claims because of the “health first” option, causing the claims to be submitted to Medicare or Medicaid; and (2) when providers submitted claims directly to Medicare or Medicaid, which these programs paid, and Progressive failed to repay them as required by law. As a consequence, Medicare or Medicaid paid claims for medical care which Progressive should have paid.

Due to this conduct, the United States and New Jersey contended that Progressive knowingly caused false claims to be submitted to Medicare and Medicaid in violation of the False Claims Act.

Parties Reach a Settlement

To avoid the delay, uncertainty, inconvenience, and expense of protracted litigation of these claims, and in consideration of the mutual promises and obligations of the Settlement Agreement, the Parties agreed that Progressive shall pay $1,380,000 to the United States (for Medicare and the federal share of New Jersey Medicaid); and
$620,000 to the State of New Jersey (for the state share of New Jersey Medicaid), totaling $2,000,000 (“Settlement Amount”).

Of the Settlement Amount, the United States shall pay to the Relator thirty-percent (30%) of the Settlement Amount actually recovered under this Agreement. New Jersey shall also pay to the Relator thirty-percent (30%) of the Settlement Amount actually recovered under this Agreement. Progressive shall also pay $212,700 to the Relator as payment for attorney’s fees and $180,000 for costs and expenses in connection with the Civil Action.

Conclusion

If you are an auto, liability, no-fault, or work comp primary payer, you had better become acquainted with the False Claims Act, 31 U.S.C. §§ 3729-3733; the Civil Monetary Penalties Law, 42 U.S.C. § 1320a-7a; the Medicare Secondary Payer Act, 42 U.S.C. § 1395y or related regulations, 42 C.F.R. Part 411; Medicaid Secondary Payer regulations, 42 C.F.R. 433.135; and the Program Fraud Civil Remedies Act, 31 U.S.C. §§ 3801-3812. Whether you have already built an internal program to comply with these federal laws, or not, one thing is clear- you better partner with experts that can help you maneuver through these Medicare and Medicaid compliance landmines. Now is the time to make sure your mandatory reporting, conditional payment, and future allocation compliance components are integrated and in place.

 

About Flagship Servcies Group

Flagship Services Group is the premier Medicare and Medicaid compliance services provider to the property & casualty insurance industry. Our focus and expertise are the Medicare and Medicaid compliance needs of P&C self-insureds, insurance companies, and third party administrators. We specialize in mandatory reporting, conditional payment resolution, and set aside allocations. Whether auto, liability, no-fault, or work comp claims, we have assembled the expertise, experience and resources to deliver unparalleled MSP compliance and cost savings results to the P&C industry. To find out more about Flagship, our folks, and our customized solutions, please visit us at www.flagshipservicesgroup.com. To speak with us about any of our P&C MSP compliance products and services, you may also contact us at 888.444.4125 or info@flagshipsgi.com. 

About Rafael Gonzalez 

Rafael Gonzalez, Esq. is President of Flagship Services Group. He speaks and writes on mandatory insurer reporting, conditional payment resolution, set aside allocations, as well as the interplay and effect of these processes and systems and the Affordable Care Act throughout the country. Rafael blogs on these topics at Medicare Compliance for P&C Insurers at www.flagshipservicesgroup.com/blog. He is very active on LinkedIn, Twitter, Instagram, and Facebook. He can be reached at rgonzalez@flagshipsgi.com or 813.967.7598

Topics: medicare, medicaid