The basics:

• Horizon settles NJ False Claims Act allegations for $100M
• Settlement resolves 2020 contract dispute over state employee health plans
• Horizon must comply with ‘lesser of’ provision and stop inaccurate EOBs
• $12M paid to relators; state retains oversight with ongoing reporting requirements

New Jersey Attorney General Matthew Platkin announced Friday that Horizon Healthcare Services Inc. (doing business as Horizon Blue Cross Blue Shield of New Jersey) agreed to pay $100 million to settle allegations that it fraudulently secured a 2020 contract to administer New Jersey’s employee health benefit programs and overcharged the state.

The agreement settled allegations that Horizon had violated New Jersey’s False Claims Act. It is the largest non-Medicaid FCA resolution in state history.

The state’s complaint, filed in U.S. District Court, alleged three counts of violations of the NJFCA by Horizon, including fraudulent inducement, presentment of false claims, presentment of false records or statements, as well as claims for breach of contract and unjust enrichment.

‘Lessor of’

“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 costs for hundreds of thousands of dedicated public servants,” said Platkin. “We will not hesitate to hold accountable anyone who breaks the law and harms our residents, no matter how big or powerful you are.

“I would like to thank our legal team and the Treasury Department for investigating this case and delivering historic relief for our residents.”

State Treasurer Elizabeth Maher Muoio said, “I want to thank the staff of Treasury’s Division of Pensions and Benefits, who have aggressively investigated this matter since the spring of 2021. The Division has been, and continues to be, laser-focused on enforcing its contracts and ensuring that our health benefits plans and our members are protected.”

The dispute centers on the “lesser of” provision in Horizon’s 2020 contract, which required the company to charge the state the lower amount between the rate charged by a provider and the amount negotiated ahead of time between the provider and third-party administrator.

‘Straightfoward’ contract dispute

The attorney general alleges that Horizon executives knew they could not comply with this “lesser of” requirement following an analysis, but bid anyway, securing a multibillion-dollar contract and collecting nearly $500 million in fees over four-and-a-half years.

The complaint alleges that Horizon executives discussed potentially making the state whole – later on, if necessary – by retroactively issuing refunds for overbilling.

Investigations by the Division of Pensions and Benefits began in 2021, focused on overbilling, failure to provide navigation and advocacy services, and inaccurate EOBs (explanation of benefits). Private relators also filed a qui tam lawsuit in 2021. While the federal government declined to intervene, the state pursued its own investigation leading to the settlement.

Key settlement terms:

• $100 million payment to New Jersey within 25 calendar days
• Horizon will cease all lesser of violations and stop issuing inaccurate EOBs
• Full compliance with the lesser of provision under the 2024 contract (co-TPA for state health plans)
• Monitoring and verification: daily, monthly, quarterly reports, plus a retrospective report through Dec. 31, 2025
• Horizon must correct discrepancies if DPB identifies violations and may not commit future NJFCA violations under any state contract
• $12 million relator share paid to five of six relators; one former DPB official excluded due to lack of supporting evidence

Horizon oversees health coverage for more than 3 million New Jersey residents, including 750,000 active state employees, early retirees and their families, managing billions in annual medical spending.

In a statement to NJBIZ, Horizon pushed back on the allegations and the characterization of the case. The company described the issue as a routine contract dispute versus intentional wrongdoing.

“The outgoing Attorney General’s statements continue a disturbing pattern of significantly mischaracterizing and distorting facts to falsely allege intentional wrongdoing where none exists,” Horizon told NJBIZ. “This has never been anything more than a straightforward contract dispute – one that Horizon tried to resolve in good faith more than four years ago in the same way it has resolved similar disagreements over the course of our long and fruitful partnership with the State: through a negotiated reimbursement.”

Longtime coming

The health insurance giant said that the attorney general, instead, chose to “waste time and taxpayer resources to achieve the same outcome.”

“And now tries to justify his decision to turn a contract dispute into a media circus by hurling loaded, false and dangerous accusations at Horizon for his personal and political benefit,” the company said. “This is particularly disappointing as Horizon entered this agreement in the spirit of good faith and partnership that has always defined our relationship with the State.

“Stripped of the Attorney General’s over-the-top rhetoric, this settlement resolves a contractual dispute concerning how a relatively small number of claims should have been paid. The fact is that Horizon had been in discussion with the State since 2021 to resolve this dispute and made significant financial offers to the State to address disputed claims. By 2023, we had fully addressed the underlying issues that led to the dispute and in 2024 were again chosen through competitive bid as an administrator of SHBP and SEHBP benefits.

“To put this settlement in context, during the four-and-a-half-year term of the 2020 contract, Horizon processed more than 48 million claims for the State and $20 billion in related payments to providers. This settlement involves 0.07% of the claims and 0.46% of the total amount paid to providers. During that same period, the steep discounts achieved through Horizon’s provider contracts produced $42.6 billion in savings to the SHBP, SEHBP, and its members. Of the $100 million settlement, $93 million covers the difference in claims payments that were in dispute and that Horizon has been seeking to resolve for more than four years.”

Public partnership

Horizon says its interpretations of this part of the contract differed from the state’s, stressing that the settlement makes clear that it never retained any portion of monies charged to the state for health care provider claims.

“Horizon paid claims we processed for the State according to the contracts in place with the doctors and hospitals filing those claims,” said the company said. “Since its founding nearly 100 years ago, Horizon has had a long and positive history of partnering with the State and other public employers.

“Those partnerships, built on a hard-earned foundation of trust, have provided best-in-class service and unsurpassed access to high quality health care for millions of public employees while saving them, and their employers, billions of dollars.

“Integrity and accountability are the foundation of our commitment to service excellence and reflected in the 95% of SHBP and SEHBP members who choose Horizon. We will continue to work with the State to empower SHBP and SEHBP members to achieve their best health.”