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Progressive units agree to $2 million False Claims Act settlement

A whistleblower will receive more than $600,000 after federal authorities obtained a $2 million+ settlement from Progressive Insurance in relation to alleged Medicare and Medicaid fraud. Progressive Casualty Insurance Co., of Cleveland, Ohio, and Progressive Garden State Insurance Co., of West Trenton, New Jersey, improperly submitted claims under the company's "health first" auto insurance policies.

In health insurance parlance, the insurance company that pays a claim is called the "payer." When a person has more than one insurance policy, one of those will be primarily responsible for paying specified claims. This is called the "primary payer." If the policy limit of the primary payer is reached, the second insurance policy kicks in to pay the remainder of the claim up to its policy limit. In general, the primary payer pays substantially more toward the claim than the secondary payer, so it's to the insurance company's advantage to be the secondary payer.

In order to set out clear rules and prevent abuse, Medicaid regulations and the Medicare Secondary Payer Act spell out when Medicare or Medicaid may be considered the primary payer. Under federal and New Jersey state law, Medicare and Medicaid cannot be the primary payer for medical claims arising in connection with car accidents, according to the Justice Department.

In the policies involved in this case, Progressive designated itself as the secondary payer in all cases in which the insured person had other insurance. That included people who had Medicare or Medicaid. As a result, Medicare and Medicaid were improperly set as the primary payer for some policyholders -- and the government programs ended up paying claims they should not have. This violated Medicaid regulations, the Medicare Secondary Payer Act and the federal False Claims Act.

Progressive agreed to settle the allegations without a determination of liability, but the allegations were brought forward by a whistleblower under the False Claims Act. Under the Act, members of the public who have knowledge of fraud can share in any financial recovery that comes about from their report.

In this case, the whistleblower's allegations resulted in a two-year investigation by special agents from the U.S. Department of Health and Human Services - Office of the Inspector General. The U.S. Attorney's Office represented HHS in the case.

Since 2010, the U.S. Attorney's Office's Health Care and Government Fraud Unit has recovered over $1.37 billion in settlements, judgments, fines, restitution and forfeitures related to the False Claims Act and other federal statutes.

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