TRENTON, NJ – New Jersey Attorney General Matthew J. Platkin announced Friday that Horizon Blue Cross Blue Shield of New Jersey agreed to pay $100 million to settle allegations it defrauded the state by overcharging healthcare costs under a 2020 benefits contract.
The case marks the state’s largest-ever non-Medicaid False Claims Act settlement.
The State alleged that Horizon knowingly violated the terms of its 2020 contract to administer health benefits for public employees and school workers, submitting inflated claims and false records to the State Health Benefits and School Employees’ Health Benefits programs.
Key Points
- Horizon will pay $100 million to settle state fraud claims tied to 2020 health contract.
- The company was accused of overbilling and violating “lesser of” pricing rules.
- Five whistleblowers will receive $12 million as part of the settlement.
State alleged Horizon knowingly defrauded health plans
According to the Attorney General’s Office, Horizon falsely promised compliance with a key cost-control rule known as the “lesser of” provision — which required the insurer to charge the state the lower amount between a provider’s billed rate and a pre-negotiated rate. Internal analyses allegedly showed Horizon knew before bidding that it could not meet that standard but pursued the multibillion-dollar contract anyway.
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The complaint alleged Horizon then submitted over a thousand false claims and misrepresented payment amounts on Explanation of Benefits statements to plan members. The concealment, prosecutors said, allowed the company to retain nearly $500 million in administrative fees over four and a half years.
Investigation began in 2021 after contract irregularities
The Division of Pensions and Benefits launched a probe in spring 2021 after discovering potential overbilling and other contract violations. Later that year, private whistleblowers, known as relators, filed a separate qui tam lawsuit under the state’s False Claims Act. Although the federal government declined to intervene, New Jersey filed its own complaint in U.S. District Court earlier this month.
State Treasurer Elizabeth Maher Muoio credited the Division of Pensions and Benefits for identifying the irregularities, saying the agency “remains laser-focused on enforcing contracts and protecting our members.”
Settlement requires oversight and compliance reports
Under the settlement, Horizon must pay $100 million within 25 days and adhere to strict oversight measures. The company is now required to submit monthly, quarterly, and daily verification reports to ensure compliance with the “lesser of” pricing provision through December 2025.
The agreement also bars Horizon from engaging in any future violations of the New Jersey False Claims Act related to state contracts. Horizon has since stopped issuing inaccurate benefit statements and agreed to fully comply with cost limits under its current co-administrator contract awarded in December 2023.
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Whistleblowers to receive partial share of recovery
Five whistleblowers — Kevin Lyons, Patrick Colligan, Mark Kovar, Mark Flores, and Vince Flores — will share $12 million of the settlement proceeds. The state declined to award a portion to former DPB official Christin Deacon, citing her role in overseeing the contract during the alleged misconduct.
Attorney General Platkin praised the outcome as a major win for taxpayers. “It is simply unacceptable that an insurance company would seek to defraud our state and overcharge us while driving up healthcare costs for public servants,” he said. “We will not hesitate to hold accountable anyone who breaks the law, no matter how powerful.”
The case was led by Assistant Attorney General Lara J. Fogel and a team from the Division of Law’s Affirmative Civil Enforcement Practice Group, under the supervision of Deputy Director Sara M. Gregory.
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