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Medicare carrier will pay $76 million in fraud settlement

Wednesday, June 26, 2002

ST. LOUIS -- In what U.S. Attorney Ray Gruender on Tuesday called the second-largest fraud settlement ever involving a Medicare carrier, General American Life Insurance has agreed to pay the government $76 million.

Gruender said the St. Louis-based carrier failed to process claims properly, failed to report errors identified in a quality assurance process and deleted claims selected for review by the government the company believed would adversely affect their error rate, replacing them with claims handled correctly.

Gruender said the concealment ran from 1985 to 1998, the year General American stopped participating in the Medicare program.

He said the settlement should send a message to all government contractors.

"You'll pay a stiff price if we catch you deceiving a government program," said Gruender, the U.S. attorney for Missouri's Eastern District.

In the settlement, General American did not admit wrongdoing.

MetLife, which acquired General American in 2000, said in a statement Tuesday that it did not anticipate any criminal charges and that allegations in the civil settlement involve General American employees "who are no longer employed by the company." Those employees are not named in the settlement agreement.

"They did not specifically admit fault, but they did pay $76 million. That tells me everything I need to know," Gruender said during a St. Louis news conference. He would not confirm whether a criminal investigation was ongoing.

Helped by ex-employees

Gruender said the alleged fraud was brought to the attention of authorities by two former General American employees who were married, Nancy and Harry Riggs.

The couple's attorney, Ronald Osman, also was the attorney for Evelyn Knoob of Carterville, Ill. Knoob was the whistleblower in the nation's largest Medicare fraud settlement involving a third party insurer hired by the government to handle Medicare bills, when Blue Cross Blue Shield of Illinois paid $144 million to the government.

The government has reached larger Medicare fraud settlements with some medical labs and other health care providers.


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