Travelers, UnitedHealth Settle Medicare Fraud Lawsuit for $20.6 Million

New York-based Citigroup subsidiary Travelers Insurance and Minnesota-based UnitedHealth Group have settled for $20.6 million a civil suit that alleged the companies falsified reports and figures in order to defraud Medicare, the U.S. Attorney's Office in New York announced Thursday, the Hartford Courant reports. Neither company admitted to wrongdoing in the settlement, in which Travelers agreed to pay the government $10.9 million and UnitedHealthcare agreed to pay $9.7 million. Travelers, which no longer administers Medicare benefits, used to process Medicare Part A claims in Connecticut, Michigan and New York and Medicare Part B claims in Connecticut, Minnesota, Mississippi and Virginia. The company was sold to UnitedHealth in 1995.

In the 1999 lawsuit, which stems from a whistleblower's allegations, the government claimed that the two companies defrauded Medicare by more than $700 million beginning in 1989 or earlier (Levick, Hartford Courant, 8/13). The suit alleges that Travelers inflated its cost reimbursements above actual expenditures to obtain higher Medicare reimbursements and performance-incentive payments. UnitedHealth allegedly continued the improper billing practices after assuming Travelers contracts in 1995 (Dow Jones/Wall Street Journal, 8/13). The suit charges that while the government hired the companies to deliver cost savings by eliminating fraud and waste by medical care providers, they "committed themselves the very acts against the United States and [CMS] that they were hired to police and extirpate" (Hartford Courant, 8/13).

David Kelley, U.S. attorney for the southern district of New York, said, "The government's investigation revealed that Travelers kept two sets of books: its actual costs and the costs as reported to the government" (Bloomberg/Los Angeles Times, 8/13). Travelers spokesperson Bob Nolan said, "The Travelers Insurance Company decided to settle in order to avoid the distraction of further litigation, and denies any wrongdoing in the case." UnitedHealth declined to comment on the case (Hartford Courant, 8/13). Robert Klimasewiski, who originally brought the lawsuit that the government later adopted, will receive a share of the settlement (Bloomberg/Los Angeles Times, 8/13).