Goldberg Kohn Secures $144 Million Ruling Against Amerigroup Corporation for Defrauding the Illinois Medicaid Program

October 31, 2006

A jury yesterday awarded the largest verdict ever in a false claims lawsuit – at least $144 million – against the Amerigroup Corporation and its Illinois health plan for defrauding the Medicaid program by discriminating against people on Medicaid based on their health status, including expectant mothers in their third trimester. 

Fred Cohen and David Chizewer, principals with Chicago-based Goldberg Kohn, represented whistle blower Cleveland Tyson, former Amerigroup vice president of government relations, in the lawsuit alleging that Amerigroup's top management devised, directed and implemented a scheme to avoid enrolling Medicaid-eligible individuals who would utilize too many health care services.  “Government healthcare systems are especially vulnerable to fraud because they are so complex, and whistleblowers provide an invaluable service in protecting our tax dollars from dishonest companies,” Mr. Cohen said. “It takes courage to blow the whistle, but we each have the responsibility to protect our government from fraud." 

The Illinois Department of Public Aid ("IDPA") had entered into contracts with Amerigroup to provide healthcare to Illinois Medicaid recipients.  Amerigroup was required by law to enroll Medicaid recipients without discriminating based on their health status.  At trial, Mr. Cohen and Mr. Chizewer proved to the jury that Amerigroup systematically avoided enrolling pregnant women and others whose health status required more health care – while still receiving large payments from IDPA calculated based on the assumption that Amerigroup would not discriminate in its enrollment practices and would provide healthcare to these people.  Amerigroup's scheme resulted in a steep decrease in the number of women in their third trimester enrolled in the health plan.  During Mr. Cohen's cross-examination of Amerigroup's former CEO, Dr. Dwight Jones, Jones confessed that this huge decrease was due to Amerigroup's successful efforts at keeping third trimester pregnant women out of the plan. 

During the trial, Mr. Cohen and Mr. Chizewer also showed the jury that the percent of revenue spent by Amerigroup on health care for its enrollees ranged from 47% to 49%, while the State of Illinois had assumed that Amerigroup would be spending 85% of revenues on health care for its enrollees.  Amerigroup's scheme resulted in the federal and state treasuries paying twice for the same healthcare—once to Amerigroup through inflated payments per enrollee, and again when the pregnant women actually received needed healthcare elsewhere.  According to the jury, Amerigroup's scheme resulted in the submission of false claims and false statements both to agencies of the United States and the State of Illinois, resulting in violations of the False Claims Act and the Illinois Whistleblower Reward and Protection Act. 

The jury rendered a $48 million verdict against Amerigroup, which was subject to trebling under the federal and state false claims acts, as well as an increase of potentially hundreds of millions of dollars more in statutory penalties.  This award obtained by Goldberg Kohn, along with Sam Cole from the United States Attorney's Office for the Northern District of Illinois and David Adams from the Illinois Attorney General's Office, is the largest jury verdict ever obtained in a False Claims Act lawsuit.  Tyson, as the whistleblower, is entitled to a share of the award.

"The jury's verdict against Amerigroup sends a clear message to companies that do business with the government:  Making promises to the government that you do not intend to keep is fraud,” Chizewer said. “The results of cheating the government can be disastrous."