Blue Cross/Blue Criminal

By Mokhiber, Russell | Multinational Monitor, July-August 1998 | Go to article overview

Blue Cross/Blue Criminal


Mokhiber, Russell, Multinational Monitor


Blue Cross/Blue Shield of Illinois, also known as Health Care Service Corporation (HCSC), pled guilty to eight felony counts and agreed to pay $144 million after admitting it concealed evidence of poor performance in processing Medicare claims for the federal government.

The company, the Medicare contractor for Illinois and Michigan, also admitted obstructing justice and conspiring to obstruct federal auditors.

The company will pay $4 million in criminal fines and $140 million in a civil settlement to resolve its liability under the False Claims Act.

At a news conference at the Justice Department to announce the guilty pleas, June Gibbs Brown, the inspector general of the Department of Health and Human Services, made it clear that the crimes of Blue Cross/Blue Shield of Illinois were in no way unprecedented.

"I would like to tell you this is an unprecedented cases, but it is not," Brown said. "Rogue contractors have been caught cheating the program in the past and I am sure, because of the vast amount of money spent on Medicare, others will be tempted to scam the program in the future."

By vast amount of money, Brown means $100 billion a year lost to health care fraud and abuse - and that may be a low estimate, according to experts such as Harvard's Malcolm Sparrow, who believe that the number might be as high as $300 billion to $400 billion a year.

Over the past five years, Brown's office has investigated five additional cases that have resulted in criminal or civil actions against a Medicare contractor.

In 1993, Blue Cross/Blue Shield of Florida paid $10 million to settle charges that it falsified and failed to properly screen provider claims.

In 1994, Blue Cross/Blue Shield of Massachusetts paid a $2.75 million fine to settle charges that it falsified its performance reports.

In 1995, Blue Cross/Blue Shield of Michigan paid a total of $51.6 million to settle charges that it falsified audit reports and used Medicare money to pay claims that were the responsibility of other insurers.

In 1997, Blue Shield of California pied guilty and paid $12 million in civil penalties to settle charges of falsifying documents and failing to properly process claims and of destroying claims.

And in 1997, Blue Cross/Blue Shield of Massachusetts paid $700,000 to settle charges that it falsified statements related to its Medicare HMO application.

But the Blue Cross/Blue Shield of Illinois case was different at least in magnitude - $144 million in fines and damages.

And the government had to be dragged kicking and screaming into the case. If it were not for a whistleblower, Evelyn Knoob, and her attorney, Ronald Osman of Marion, Illinois, the government would never have prosecuted the case.

Knoob began working at Blue Cross/Blue Shield's Marion, Illinois facility in 1983. …

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