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Horizon Blue Cross Blue Shield of New Jersey has agreed to pay $100 million to settle allegations that it fraudulently induced the state to award it a multibillion-dollar contract to administer employee health benefits and then overcharged throughout the contract’s duration.
The settlement, announced Nov. 14 by New Jersey Attorney General Matthew Platkin, represents the state’s largest-ever non-Medicaid False Claims Act recovery.
“At a time when everyone is rightly concerned about the cost of their healthcare, it is simply unacceptable that an insurance company would seek to defraud our state and overcharge us while driving up the costs of healthcare for hundreds of thousands of dedicated public servants,” Attorney General Platkin said.
The case centers on Horizon’s role as third-party administrator for New Jersey’s state and school employee health plans. Horizon, which administers public plans that insure more than 750,000 public workers and retirees, served as the sole TPA under a contract that ran from January 2020 through June 2024. During that period, the company processed approximately 48 million claims, handled $62.8 billion in provider charges, and received nearly $500 million in TPA fees from the state.
According to the settlement agreement filed Nov. 7 in a federal New Jersey court, the problems began during the 2019 bidding process when the state introduced a cost-saving mechanism known as the “lesser of” provision. The requirement mandated that the TPA charge the state the lower amount between what a healthcare provider actually billed and the negotiated rate between the TPA and that provider. The state alleges Horizon analyzed claims data before bidding, determined it could not comply with the requirement, but submitted a winning bid anyway while concealing this inability. After winning the contract, Horizon allegedly continued violating the provision and submitted over a thousand false claims for payment while also issuing inaccurate Explanation of Benefits statements to members.
The investigation began in April 2021 when the state started examining potential contract violations. In November 2021, six whistleblowers filed a qui tam lawsuit under seal. The federal government declined to intervene, but the state conducted a years-long investigation before filing its complaint.
Under the settlement terms, $10 million will go to the False Claims Prosecution Fund, $12 million to five of the six whistleblowers, and $78 million to the New Jersey Division of Pensions and Benefits. Horizon will also pay $1.25 million in attorneys’ fees.
Beyond the payment, the settlement includes extensive reporting requirements to ensure Horizon’s compliance with the “lesser of” provision under its current contract. Despite the allegations, the state awarded Horizon a new TPA contract in December 2023 alongside Aetna as co-TPA. The settlement requires enhanced verification reports that allow state oversight of claims processing and compliance.
Horizon has disputed the characterization of its conduct, calling the matter “a straightforward contract dispute” that it had attempted to resolve in good faith more than four years ago. In a statement shared with Becker’s, the company accused the Attorney General of “significantly mischaracterizing and distorting facts to falsely allege intentional wrongdoing where none exists” and criticized the decision to turn “a contract dispute into a media circus” for “personal and political benefit.”
The company emphasized that the settlement involves just 0.07% of the claims processed and 0.46% of the $20 billion paid to providers during the contract term, while its provider contract discounts produced $42.6 billion in savings to the plans. Horizon stated that $93 million of the settlement covers disputed claims payments the company had been seeking to resolve for more than four years, and asserted it never retained any portion charges to the state for provider claims.
This article was originally published on Becker’s.