Skip to main content
Press Release

Pennsylvania Medicare Advantage Plan Provider Agrees to Pay $2.25M to Resolve Allegations of Inflated Plan Bids

For Immediate Release
U.S. Attorney's Office, Eastern District of Pennsylvania

PHILADELPHIA – United States Attorney William M. McSwain announced that Keystone Health Plan East, Inc. and QCC Insurance Company, Inc. (collectively referred to as “KHPE/QCC”), on behalf of parent company Independence Blue Cross, LLC (“IBC”), operator of Medicare Advantage plans, have agreed to pay a total of $2,250,000 plus interest to resolve False Claims Act allegations of incorrectly calculating anticipated plan costs, resulting in inflated Medicare Advantage plan bids to the Centers for Medicare and Medicaid Services (“CMS”).

IBC operates a number of Medicare Advantage plans for Medicare beneficiaries, and is reimbursed by CMS, which pays IBC’s subsidiaries KHPE/QCC. Medicare Advantage plans are also sometimes called “Part C” or “MA Plans,” and include bundled coverage for Medicare Part A (Hospital Insurance) and Medicare Part B (Medical Insurance), and usually Medicare prescription drugs (Part D). KHPE/QCC submits annual bids that include anticipated costs for each Medicare Advantage plan to be offered the following year. The government alleges that KHPE/QCC incorrectly calculated its actual prior costs in the financial plan bids submitted to CMS for contract years 2009 and 2010. The incorrect and inflated prior cost data resulted in higher base amounts in KHPE/QCC’s Medicare Advantage plan bids, causing CMS to pay inflated reimbursement to KHPE/QCC. The United States contends that these claims were false in light of defendant’s conduct.

This settlement resolved a lawsuit filed under the False Claims Act in the U.S. District Court for the Eastern District of Pennsylvania by an employee of IBC. Under the qui tam (or whistleblower) provisions of the False Claims Act, private citizens are permitted to bring lawsuits on behalf of the United States and obtain a portion of the government’s recovery. The False Claims Act also permits the government to intervene and take over the lawsuit, which occurred in this case. The whistleblower in this case, Mr. Eric Johnson, will receive $499,438.05 as his share of the recovery.

“Investigating credible allegations of fraud against federal healthcare programs saves taxpayer dollars, especially in complex Medicare Advantage Part C cases such as this, when the alleged conduct has potential implications for Medicare beneficiaries and drives up the cost of Medicare Advantage plans,” said U.S. Attorney McSwain. “Medicare Advantage plan operators must know the CMS contracting rules, and the proper presentation of claims costs required by those programs, and abide by them.”

“Today’s settlement represents significant teamwork and shows our commitment to investigating all potential allegations of fraud against the Medicare Part C Programs, no matter how complex,” said Maureen R. Dixon, Special Agent in Charge of the Office of the Inspector General, Department of Health and Human Services. “We will continue to partner with the United States Attorney’s Office to evaluate allegations brought under the False Claims Act to ensure the integrity of Medicare programs.”

The government’s pursuit of these matters illustrates its emphasis on combating healthcare fraud. One of the most powerful tools in this effort is the False Claims Act. Tips and complaints from all sources about potential fraud, waste, abuse, and mismanagement can be reported to the Department of Health and Human Services (“HHS”), at 1-800‑HHS‑TIPS (1-800-447-8477).

This matter was investigated by the U.S. Attorney’s Office for the Eastern District of Pennsylvania, in conjunction with the U.S. Department of Health and Human Services Office of Inspector General. The lawsuit is captioned United States ex rel. Eric Johnson v. Independence Blue Cross, Civ. Action No. 10-CV-1520 (E.D. Pa.). Assistant U.S. Attorneys Viveca D. Parker and Eric D. Gill handled the case in the Eastern District of Pennsylvania, with assistance from auditor Dawn Wiggins.

The claims resolved by this settlement are allegations only and there has been no determination of liability.


Suite 1250, 615 Chestnut Street
Philadelphia, PA 19106

Media Contact

If you have not done so already, follow @USAO_EDPA and @USAttyMcSwain on Twitter to get the most up-to-date information about big cases and community news.

Updated September 3, 2020

False Claims Act