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         Another Multi-Million Blue Cross Settlement

WASHINGTON, D.C.--Blue Cross Blue Shield of Michigan today paid the
United States $24 million to settle a lawsuit charging that it
unlawfully billed the government's Medicare program for thousands of
medical insurance claims that should have been paid from private
insurance funds, the Department of Justice announced.

Assistant Attorney General Frank W. Hunger, head of the Civil Division,
said the settlement resolves a suit (United States v. Blue Cross Blue
Shield of Michigan) the Department filed against Blue Cross under the
Medicare Secondary Payer (MSP) laws in U.S. District Court in Detroit in
1989.

"Congress passed the MSP laws to compel private insurance companies to
assume a greater share of the nation's health care costs, particularly
those of older workers and their spouses who are covered by an
employer-sponsored health plan," said Hunger. "This settlement
demonstrates the government's commitment to enforce these laws and
protect the fiscal integrity of the Medicare system."

MSP laws require private insurers such as Blue Cross to pay primary
benefits in certain circumstances where a person has medical insurance
under both Medicare and an employer health plan. For example, when a
person aged 65 or older continues to work and receives health coverage
through his or her employer. Blue Cross, a major private health care
insurer based in Detroit, had contracted with the Health Care Financing
Administration, the federal agency which administers the Medicare
program, to manage the Medicare program in Michigan.  HCFA has cancelled
the Medicare contract with Blue Cross and named Health Care Service
Corporation, an affiliate of Blue Cross Blue Shield of Illinois, to
manage the Michigan Medicare program.

An audit by the Office of the Inspector General of the Department of
Health and Human Services found that Blue Cross paid thousands of
dual-coverage claims from the Medicare Trust Fund rather than from its
private insurance funds.

Judge George E. Woods of U.S. District Court in Detroit had ruled that
Blue Cross must reimburse the government for Medicare payments that Blue
Cross should have paid although the size of the reimbursement had not
been determined.

"We are satisfied that the government received fair and equitable
compensation from Blue Cross today," Hunger said. "We also want to point
out that under today's agreement Blue Cross is required to share data
with the government.  This will result in significant future savings
since that will enable us to process claims more efficiently."

As part of the settlement, Blue Cross will share data with HCFA to
prevent future Medicare overpayments and identify cases of duplicate
payments to health care providers.

The settlement resolves a longstanding dispute between HCFA and Blue
Cross over the extent of the company's liability for such Medicare
payments.
 
[Blue Cross Blue Shield of Michigan Pays U.S. $24 Million to Resolve
Medicare Claims Dispute, DOJ, 1/18/95]

         Yet Another Multi-Million Blue Cross Settlement
         
WASHINGTON, D.C.--Blue Cross Blue Shield of Michigan Inc. will pay the
United States $27.6 million to settle civil claims it improperly billed
and submitted false documentation to the government as the fiscal
intermediary of the Medicare program in Michigan, the Department of
Justice announced today.

Assistant Attorney General Frank W. Hunger, in charge of the Civil
Division, and U.S. Attorney Lynne A. Battaglia of Baltimore said the
settlement resolves a qui tam complaint, United States ex rel. Darcy
Flynn v. Blue Cross Blue Shield of Michigan, that was filed in U.S.
District Court in Baltimore on August 4, 1992.

Blue Cross Blue Shield, under a contract with the Health Care Financing
Administration, managed the Medicare Part A program and was required to
audit the cost reports of participating hospitals, determine which costs
were authorized under the Medicare regulations and make the appropriate
payments. HCFA, the federal agency which administers the Medicare
program, monitored Blue Cross by reviewing a sample of the audits.

The complaint alleged that Blue Cross Blue Shield, which is
headquartered in Detroit, defrauded the government by performing cursory
and inadequate audits.  When HCFA asked to review specific audits, a
federal investigation revealed, Blue Cross Blue Shield "corrected" the
audits and backdated revised work papers to conceal the fact that the
original audits were inadequate and poorly done.

HCFA, based on the "corrected" audits, concluded that Blue Cross Blue
Shield was performing its audits responsibly when in fact Blue Cross
Blue Shield was not identifying hospital payment claims that did not
qualify for Medicare reimbursement, causing the improper payment of
federal funds to the hospitals.

"It is particularly disappointing that one of the very fiscal
intermediaries that HCFA relied on to administer the Medicare program
would defraud Medicare by the way it carried out its contractual
obligations," said Hunger.

Under the qui tam provisions of the act, Darcy Flynn, a former Blue
Cross auditor who filed the original action on behalf of the government,
will receive 20 percent of the proceeds.  The False Claims Act permits
the government to recover three times the amount of its actual loss plus
civil penalties of $5,000 to $10,000 for each false claim.

In addition, HCFA has cancelled both the Part A and Part B contracts it
had with Blue Cross Blue Shield.

Earlier today, Blue Cross Blue Shield paid the United States $24 million
to settle a federal lawsuit for illegally billing Medicare for health
insurance claims that should have been paid by Blue Cross.

[Blue Cross Blue Shield of Michigan Pays U.S. $27.6 Million for
Submitting False Medicare Data, DOJ, 1/18/95]

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