HMO Slammed With $144 Million Penalty in Discrimination Suit

By Marianne Madden

Published on November 01, 2006

The suit’s plaintiffs were the federal and Illinois governments, as well as former Amerigroup executive Cleveland Tyson, who stands to gain millions under whistleblower laws for exposing the company's actions.

According to the lawsuit, Amerigroup systematically avoided enrolling pregnant women and those with other conditions that involve expensive health care bills. Emails and videotapes showed Amerigroup executives discussing reductions in the enrollment of pregnant women, cherry-picking “healthies" — healthy people who represented smaller payouts and higher profits — and training their marketing representatives to avoid signing up pregnant women.

Illinois had hired the company to insure those in need, especially poor people eligible for Medicaid, and paid them a flat fee per patient. In addition to Monday’s stinging penalty, Amerigroup is also accused of making more than 18,000 false claims to the state, which lawyers say may spur them to pursue almost $200 million in further damages. Under law, the company may be liable for $11,000 per instance of fraud.

Amerigroup vowed to appeal the decision, claiming that they avoided enrolling third-trimester pregnant women only to prevent the women from having to change doctors.

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