Amerigroup to Appeal Ill. Decision

October 30, 2006

Amerigroup Corp. said that it will appeal a jury verdict that found against the company and its Illinois subsidiary in qui tam litigation tried in the U.S. District Court for the Northern District of Illinois.

The Company release said that a number of the Court’s rulings constitute reversible error and impacted the jury’s findings. Amerigroup intends to appeal the case to the 7th Circuit Court of Appeals. The Company asserts that it was acting with the knowledge of and in accordance with the direction of the Illinois Department of Public Aid.

“For more than 11 years, we have always worked hard to ensure that we provide our state partners with the highest standards of service and ethics,” said Jeffrey L. McWaters, Amerigroup chairman and CEO. “The leadership of our Illinois health plan, including two physicians and two nurses, firmly believe that they did what the Illinois Department of Public Aid asked them to do.

The Company said it will ask the Court to stay the imposition of any damages pending the outcome of its appeal. If the verdict is upheld, AMERIGROUP and its Illinois subsidiary would be required to pay damages of $144 million, which is $48 million trebled. The jury also found that there were 18,130 false claims. Under the Federal False Claims Act, false claims carry a penalty of between $5,500 and $11,000 per claim. Under the Illinois Whistleblower and Reward and Protection Act, false claims carry a penalty of between $5,000 and $10,000 per claim. The Court instructed the jury that each enrollment form completed by a prospective member during the applicable period constituted a claim for payment. The Company believes that the Court’s ruling in that respect was improper and unprecedented.

The suit, which was unsealed in June 2003, alleged that Amerigroup Illinois inappropriately worked to avoid or discourage the enrollment of third-trimester pregnant women between 2000 and 2003. A seven-member jury found in favor of a former Amerigroup employee who brought the lawsuit, the State of Illinois and the U.S. Department of Justice, both of which joined in the suit two years later.

None of the allegations in the lawsuit involved Amergroup’s active subsidiaries in its other states.

In some circumstances, the federal government may decide to exclude a company from future contracts as a result of civil verdicts. Amerigroup intends to immediately work to assure the government that exclusion is not warranted because the circumstances in the allegation were unique to Illinois and the Company has adequate controls to ensure prompt detection and reporting of any potential improper activities.

A conference call discussing the decision of the jury in Illinois will be held tomorrow, October 31, 2006, at 8:30 a.m. Eastern Time. The conference call can be accessed by dialing 800-322-2803 (domestic) or 617-614-4925 (international) and providing passcode 86919214 approximately ten minutes prior to the start time of the call. A recording of the call may be accessed by dialing 888-286-8010 (domestic) or 617-801-6888 (international) and providing passcode 99285557. The replay will be available beginning Tuesday, Oct. 31, 2006 at 10:30 a.m., through Tuesday, November 7, 2006. The conference call will also be available through the investors’ page of the Company’s Web site, A 30-day replay of this webcast will be available on the Web site approximately two hours following the conclusion of the live broadcast.

Amerigroup Corp., headquartered in Virginia Beach, Va. identifies itself as a healthcare access provider for low-income Americans through development of managed health care services for the public sector.

Source: Amerigroup Corp.

Topics Illinois

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