The D.C. government recently awarded a pair of $100 million contracts to two managed-care providers that are being sued by the city for allegedly defrauding it of millions.
One of those companies, Amerigroup D.C. Inc., on Wednesday walked away from its $102.9 million fiscal 2009 deal. The 38,000 Medicaid recipients who currently subscribe to Amerigroup as their managed-care organization will be transitioned to another company over the next 60 to 90 days, District officials said.
Attorney General Peter Nickles filed a complaint last week in D.C. Superior Court against Amerigroup, alleging multiple counts of fraud. Nickles filed a similar complaint in early March against DC Chartered Health Plan, itself the winner of a $106.7 million contract for 2009.
The Department of Health announced on March 10 that it had awarded $329 million in contracts to four companies, including Amerigroup and Chartered, to provide managed-care programs for Medicaid and DC Healthcare Alliance clients. In the same news release, the Health Department noted that the city “began legal action against [Chartered] to recover Medicaid funds from the company’s alleged improper billing.”
“You’re innocent until proven guilty, and they made the best bids in response to the [request for proposals],” Nickles said.
One source close to the solicitation process said the District was under pressure from the federal government, which pays 70 percent of the city’s Medicaid costs, to wrap up the deals as quickly as possible. In the absence of any adjudication in the fraud cases, the source said, “we did not have a basis to disqualify them.”
Amerigroup, a D.C. contractor since 2002, is accused of billing the city for administrative costs unrelated to the care of its subscribers. Chartered, a contractor since 1998, is accused of self-dealing — paying unjustifiably high rates to its own affiliates and then billing the District for the costs.
An audit would later reveal that the District was paying far more than it should have been, according to Nickles. The total rip-off, Nickles said, was $16 million a year.
James W. Truess, Amerigroup’s executive vice president, said in a statement issued Wednesday that the allegations in the complaint are “without merit and based upon a fundamental misunderstanding of well-established rating and regulatory requirements.”
Jeanne Clarke Harris, Chartered’s spokeswoman, said the company is committed to its clients. There are no problems, she said, “that cannot be resolved to our mutual satisfaction.”
