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An insurance company has agreed to pay $1.5 million to settle allegations of overcharging the Federal Employee Health Benefits Program.

According to the Justice Department, between 1992 and 2002 Anthem Blue Cross and Blue Shield of Indianapolis overcharged the Office of Personnel Management, which administers the FEHBP, by including "impermissible profit" in its charges. Justice also claimed that the company failed to pass on to OPM the full amount of its share of money from drug company rebates.

Anthem, which is owned by WellPoint Health Networks, supplies insurance to FEHBP participants in Indiana, Kentucky and Ohio.

"The prosecution of this and similar actions reflect the department's continuing commitment to ensuring that contractors meet their responsibilities to federal health care programs, including the FEHBP," said Peter Keisler, assistant attorney general for Justice's Civil Division.

The accusations against Anthem were raised by Andrew M. Garner III, a former employee of the company, under the False Claims Act, which allows private citizens to bring suit on behalf of the government and potentially receive a share of the proceeds.

Garner alleged that Anthem knowingly included a profit of about 10 percent in the company's billings to OPM for printing, mail sorting and the microfilming and archiving of documents.

Garner also alleged that in order to encourage its customers to use a list of preferred medications, those prescriptions were offered to Anthem users at a lower cost than comparable brands. This increased sales for the drug manufacturers, who in turn gave rebates back to Anthem. But Anthem refunded only a portion of those rebates to OPM. Garner said that the average rebate for the preferred medications was $4 per prescription but that Anthem gave OPM only $1.

According to his attorney, Tim Keller, Garner will file an objection to the settlement some time in the next two weeks, arguing that the $1.5 million is not "fair, adequate and reasonable under the circumstances." Keller would not disclose the amount his client believes is appropriate. Garner and Justice officials must negotiate what percentage of the settlement he will receive.

Garner was terminated in 1998 from his position as director of marketing and health maintenance plan operations in Anthem's Cincinnati, Ohio, office. Keller says his client was terminated because of complaints he made to the company about the FEHBP contract.

A spokesperson for Anthem, Debbie Davis, said the company has cooperated with federal officials and is "pleased to have resolved the government's concerns." The settlement does not include an admission of liability on the part of the company.

Davis said Anthem will continue to provide health insurance under FEHBP and that the settlement will not affect any of its current clients.

COMMENTS

• In my opinion this settlement was a farce and the negotiators for the Justice Department are either incompetent, in bed with Anthem and hoping to get a job with them when they retire, or just plain lazy. The settlement goes no where near removing the profit Anthem made in this scheme much less making the company incur a serious penalty for its fraud and theft. Anthem's health insurance premiums have gone up double digits over the past years on top of this so why wasn't there a significant rate reduction for federal employees who use Anthem included in the penalty? This settlement is no more to Anthem than merely the "cost of doing business" when caught by the Federal Government. They didn't even feel this pathetic slap on the hand in their net profit for the year. Everett Wilson Posted August 30, 2005 7:32 AM
• The government encourages contractors to steal. They play right into the hands of contractors. Its like speeding, if the cop is not there when you speed, is it illegal? Actually it is illegal but you only pay the ticket if the cop catches you. If there is no one looking, well, do what you think you can get away with. The taxpayer is powerless in most cases. GovExec.com reader Posted August 25, 2005 7:23 AM
• "Davis said Anthem will continue to provide health insurance under FEHBP and that the settlement will not affect any of its current clients" This company should be dropped by OPM. What is OPM for if not to enforce contracts with health carriers? The only reason this refund came about was a discharged employee spoke up - he didn't do it while he was an employee. Why didn't OPM know it was being overcharged? The real problem is in OPM, as well as with the contractor. Someone at OPM should be fired and the contractor should not be allowed to contract with the government! taxpayer Posted August 24, 2005 6:27 AM