AssuredPartners to Pay $107M to Settle False Claims Act Allegations of Affordable Care Act Enrollment Fraud

By the Constantine Cannon Whistleblower Team

On April 7, the Department of Justice (DOJ) announced that Florida-based AssuredPartners, Inc. (AP), a national partnership of insurance companies, agreed to pay $107 million to settle allegations of violating the False Claims Act by submitting fraudulent applications for Affordable Care Act (ACA) insurance.[1]  In a parallel criminal proceeding, AP’s insurance brokerage subsidiary, AP of South Florida (APSF), pleaded guilty for its role in the ACA enrollment fraud scheme, preying on vulnerable consumers to fraudulently enroll them into government subsidized ACA plans.

What Was the Nature of AssuredPartners’ Violations?

According to the government, from February 2021 through September 2022, APSF submitted fraudulent applications for subsidized ACA plans on behalf of thousands of consumers to obtain commissions and bonus payments from insurers.  APSF allegedly contracted with “street marketers” who targeted homeless shelters, bus stops, drug treatment clinics and similar locations, offering cash or gift cards to enroll people in subsidized ACA plans or to secure their personal information to submit applications on their behalf.

The government claimed APSF provided false income information in the ACA applications to qualify for the highest government subsidy and provided other false information in response to government efforts to verify the accuracy of the applications.  The scheme not only cost the government money but also apparently subjected many of those caught up in it to serious disruptions in their medical care by being enrolled in subsidized ACA plans that did not provide coverage for their medical needs.

For example, some of those who APSF fraudulently enrolled into fully subsidized ACA plans lost access to free health benefits through Medicaid or local assistance programs, facing increased costs in accessing HIV medication, medication to treat opioid dependence, and medication to treat mental health disorders.  Some likewise faced unaffordable co-pays and other costs because APSF enrolled these consumers in plans without regard to the consumers’ medical needs, the availability of other programs (including Medicaid and local assistance programs) and the consumers’ ability to pay out-of-pocket costs.

The government described APSF’s conduct, from which AP also significantly benefitted, as “a brazen scheme that caused real harm by targeting vulnerable individuals for profit and disrupting their access to critical care.”  The government further stressed it “will continue to aggressively pursue accountability for those who choose greed over patients,” and its expectation that the settlement “sends the clear message that the United States will hold accountable actors who exploit those programs to enrich themselves at the expense of the public.”

APSF agreed to resolve the criminal charges by paying restitution of $27.6 million and admitting it intentionally defrauded the federal government by targeting vulnerable, low-income individuals experiencing homelessness, unemployment, and mental health and substance abuse disorders, and inducing them to enroll in subsidized ACA plans for which they did not qualify.

Notably, the government also went after former APSF President Cory Lloyd individually, securing a 20-year prison sentence, and highlighting his role and the government’s commitment to “pursue both corporate and individual actors that defraud the United States taxpayer and exploit consumers.” The government underscored that “APSF made money on the backs of vulnerable consumers and by siphoning money from a critical social safety net meant to protect working families,” and that the scheme “was orchestrated by APSF’s highest ranking executive and was pervasive throughout the company.”

What Role Do Whistleblowers Play in Reporting Healthcare Fraud?

The allegations that led to this settlement and criminal resolution originated in a whistleblower lawsuit filed under the qui tam provisions of the False Claims Act, which allow individuals to bring lawsuits on behalf of the government against those that commit fraud against the government.  In return, successful whistleblowers are entitled to up to 30% of the government’s recovery.  In this matter, the whistleblower will receive an award of $24.3 million from the proceeds of the government’s civil recovery.

Whistleblowers are responsible for originating the majority of False Claims Act cases, especially those involving healthcare fraud.  In fact, since Congress expanded the whistleblower incentives and protections under the statute in 1986, whistleblowers have originated roughly 70% of all False Claims Act cases, leading to more than $60 billion in government recoveries.  Whistleblowers have received close to $10 billion in awards for these efforts.

Whistleblowers play such a dominant role in enforcing the statute because the underlying fraud often involves complex schemes the government cannot identify without the help of those on the inside with a first-hand window into the misconduct.  Constantine Cannon partner Dan Vitelli, who has significant experience representing whistleblowers reporting healthcare and government contracting fraud, notes the role of whistleblowers in uncovering fraud is only becoming more critical.

Vitelli says, “As the government continues to crack down on healthcare fraud, companies are using sophisticated schemes to avoid detection.  In that type of situation, insiders are even more important to uncover fraud.”  Vitelli adds that this case “exemplifies how whistleblowers can provide valuable information to the government, resulting in a successful enforcement effort.”

Constantine Cannon Has Substantial Experience Representing Healthcare Fraud Whistleblowers Under the False Claims Act

Constantine Cannon has substantial experience and success representing whistleblowers in bringing False Claims Act cases involving healthcare fraud.  One of these cases involved fraud against the Medicare Advantage program that earlier this year resulted in a record $556 million settlement.  Please see our successes page for a full listing of our many False Claims Act successes.

If you would like to learn more about these matters or what it means to be a whistleblower under the False Claims Act, please do not hesitate to contact us.  We will connect you with an experienced member of our whistleblower team for a free and confidential consultation.

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Sources:

[1]  See https://www.justice.gov/opa/pr/national-partnership-insurance-brokers-and-its-former-subsidiary-agree-pay-over-135-million.

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