A couple of days ago an Illinois jury ruled against Amerigroup Corporation in a false claims act case in federal court in Chicago. You can read the Chicago Tribune story about the case here.
The false claims act is also known as the whistleblower or qui tam statute. You can find out more about it at the False Claims Act Legal Center website. It is designed to provide incentives for people who have knowledge of schemes to defraud the government to bring that conduct to light. It can serve as a powerful tool in preventing government ripoffs. If you have knowledge of fraud, you present that knowledge to government authorities and that information forms the basis for a recovery of money that otherwise would be lost, the whistleblower shares in the recovery. In addition, the statute imposes treble damages against the fraudster.
Amerigroup ran a managed care plan for the Illinois Medicaid program. They took $243 million in federal and state money as premiums and then cherry-picked who they would insure. They worked especially hard to avoid signing up pregnant women and other poor health risks. The problem was that in exchange for receiving the premium dollars they were required to sign up all eligible participants regardless of health status. The amount of the loss was $48 million and the trebled judgment against Amerigroup was $144 million. The whistleblower was a former executive with the company who stands to obtain $21 to $36 million as a result of coming forward with the information about Amerigroup's activities.
Amerigroup says it will appeal.