Faking Compliance While Practicing Fraud?

Highmark, Inc., a Pennsylvania-based nonprofit corporation that provides health insurance to approximately 23 million people in Pennsylvania and across the nation, is a three-time loser with the False Claims Act, and a fourth loss may be on the horizon.

Highmark's first run-in with the whistleblower law occurred in 1995, when it and 62 other Blue Cross and Blue Shield plans paid $27 million to settle nearly identical allegations that they had made Medicare the "primary payer" in health insurance claims when in fact they were supposed to assume that role themselves. Highmark paid a $6 million share of that settlement, and also agreed to adhere to Medicare Secondary Payer rules.

Three years later, Highmark paid another $38.5 million to settle claims that its corporate predecessor, Pennsylvania Blue Shield, violated the False Claims Act by obstructing Medicare audits and failing to properly process claims in its role as a Medicare intermediary. In early 2004, Highmark paid $1.5 million, this time to settle a case over altered Medicare files designed to show that Highmark was doing a better-than-actual job handling Medicare insurance claims cases.

Now Highmark looks like it's going down for a fourth count. In July of 2000, a whistleblower filed a qui tam lawsuit which alleged that Highmark continued to knowingly violate Medicare Secondary Payer rules even after its 1995 settlement agreement.

Sadly, the whistleblower in this case is Elizabeth Drescher, the person hired by Highmark to coordinate data-exchanges with the government and to educate Highmark customers and staff about the terms of the 1995 settlement agreement and Medicare Secondary Payer regulations. Drescher's lawsuit alleges Highmark continued to knowingly mishandle Medicare Secondary Payment claims for almost a full decade after first being nailed for the offense by the U.S. Department of Justice. According to the suit, in 1997 a Highmark Senior Vice President estimated the Company's potential liability at $20 million, and this figure was presented to the company's executive committee, including its chief executive officer. Not only did Highmark not take action to end its fraud, but it actually demoted Ms. Drescher and removed her from responsibility for Medicare Secondary Payer issues.

Ms. Drescher filed her False Claims Act lawsuit in July of 2000. In February of 2003, the case came out from under seal when the U.S. Department of Justice joined the case -- a bad omen for Highmark, as the DoJ wins or settles more than 90% of the cases it joins.

On February 20th of this year, the U.S. District Court for Eastern Pennsylvania denied Highmark's motion to dismiss the lawsuit, citing a floor statement by Senator Charles Grassley (R-IA) explaining provisions incorporated into the Medicare Prescription Drug Act of 2003 (MPDIMA) that stressed that Medicare Administrative Contractors (such as Highmark) are liable under the False Claims Act.