Consumer Fraud

Whistleblower Suit Against Progressive Ends With $2 Million Settlement

Pills Stethascope on Money 435x289 Whistleblower Suit Against Progressive Ends With $2 Million SettlementA whistleblower False Claims Act lawsuit led to a settlement between the U.S. and two insurance companies accused of sticking Medicare and Medicaid with claims the insurers were supposed to cover.

The companies named in the whistleblower lawsuit — Progressive Casualty Insurance Co. of Cleveland, Ohio, and Progressive Garden State Insurance Co. of West Trenton, New Jersey — are part of the Progressive Group of Insurance Companies, one of the nation’s largest auto insurance providers.

When an individual has Medicare or Medicaid and other private health insurance, each type of coverage is known as a “payer.” The insurance company that pays first, called a “primary payer,” generally pays to the limit of its coverage for a customer’s health care claims. If there are health care costs that the primary payer doesn’t cover, the individual’s other coverage, referred to as the “second payer” may pay those costs.

Both federal and New Jersey law mandate that if an individual has private insurance along with Medicare or Medicaid, then the government programs can’t be the primary payer for certain claims. Instead, officials said, the private insurer must act as the primary.

According to the New Jersey U.S. Attorney’s Office, the “health first” automobile insurance policies that Progressive offered designated the policyholder’s health insurance carrier as the primary payer for medical claims that arose in connection with an automobile accident.

“Even though, under the law, Progressive could not decline to make primary payment to Medicare or Medicaid beneficiaries, the company permitted Medicare and Medicaid beneficiaries to elect a ‘health first’ policy,” the U.S. Attorney’s Office explained. “Many of these policyholders in New Jersey who were Medicare or Medicaid beneficiaries incurred medical claims in connection with an automobile accident.

“Because Progressive’s ‘health first’ policies designated itself as the secondary payer, Medicare and Medicaid improperly paid for claims that Progressive should have paid,” the U.S. Attorney’s Office said.

The U.S. and New Jersey supported the whistleblower’s allegations that Progressive’s policies violated the Medicare Secondary Payer Act and Medicaid regulations, causing false claims to be submitted to Medicare and Medicaid.

Under the “qui tam” or whistleblower provisions of the False Claims Act, whistleblowers whose False Claims allegations lead to a recovery are awarded a percentage of the total financial recovery. The whistleblower in this case will receive more than $600,000 of the more than $2 million that Progressive agreed to pay.