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Press Release

BlueCross BlueShield of Illinois to Pay $25 Million to Settle Civil False Claims Act Allegations

For Immediate Release
Office of Public Affairs

WASHINGTON - BlueCross BlueShield of Illinois, a division of Health Care Service Corporation, has agreed to pay the United States and the state of Illinois $25 million to settle False Claims Act allegations, the Justice Department announced today. The settlement resolves claims by the United States that BlueCross BlueShield of Illinois wrongly terminated insurance coverage for private duty skilled nursing care for medically fragile, technologically dependent children, in order to shift the costs of such care to the Medicaid program. Medicaid funds a special program designed to provide home care for children at risk of institutionalization.

As a result, children whose specialized care should have been covered by BlueCross BlueShield of Illinois under the terms of existing insurance policies, were shifted to the government-funded Home and Community Based Services Medicaid program, operated by the Illinois Division of Specialized Care for Children under an agreement with the Illinois Department of Healthcare and Family Services. As a result, Medicaid spent millions of dollars providing care that should have been paid for by private insurance.

The settlement resolves claims that BlueCross BlueShield of Illinois denied patient claims based on internal, undisclosed guidelines that were more restrictive than the language provided to beneficiaries in plan policy materials. Additionally, the government alleged that BlueCross BlueShield of Illinois improperly told policy holders that children were not covered for private duty nursing during the claims review process sought after initial denials.


Under the agreement, BlueCross BlueShield of Illinois will pay $14.25 million to the state of Illinois and $9.5 million to the United States. The company will also pay $1.25 million to Illinois for allegations under the state consumer fraud statute.

“It is appalling for a major insurance company to terminate medical services coverage for sick children in need just to boost their bottom line at taxpayers’ expense, as we’ve alleged here,” said Tony West, Assistant Attorney General for the Justice Department’s Civil Division. “When private insurance companies improperly force patients to turn to Medicaid for medical coverage those companies should be providing, we will hold them accountable.”


“The case filed today is a good example of this office's ongoing commitment to combat health care fraud, said Patrick J. Fitzgerald, U.S. Attorney for the Northern District of Illinois. We will make all efforts to return money to the federal Medicaid program as well as to the Illinois Medicaid program.”


The case was handled by the Justice Department’s Civil Division, the U.S. Attorney’s Office for the Northern District of Illinois and the Office of Inspector General of the Department of Health and Human Services (OIG-HHS).


“Private insurance companies that deny properly payable claims in order to inappropriately shift costs to federal health care programs -- as BC/BS of IL is alleged to have done – will be held accountable,” said Daniel R. Levinson, Inspector General of the Department of Health & Human Services. “OIG, along with our federal and state partners, will continue to protect patients and taxpayers by prosecuting those behind these schemes."


This resolution is part of the government’s emphasis on combating health care fraud and another step for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced by Attorney General Eric Holder and Kathleen Sebelius, Secretary of the Department of Health and Human Services in May 2009. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in that effort is the False Claims Act, which the Justice Department has used to recover more than $5.5 billion since January 2009 in cases involving fraud against federal health care programs. The Justice Department’s total recoveries in False Claims Act cases since January 2009 are nearly $7 billion.

Updated September 15, 2014

Press Release Number: 11-243