New Jersey Attorney General Matt Platkin announced Friday that Horizon Blue Cross Blue Shield of New Jersey, will pay the state $100 million to settle allegations that it fraudulently secured a 2020 contract to administer public-employee health benefits and subsequently overcharged taxpayers for medical claims.
The settlement — New Jersey’s largest non-Medicaid False Claims Act recovery — resolves claims that Horizon violated the New Jersey False Claims Act by inducing the state to award it a multibillion-dollar third-party administrator (TPA) contract and then submitting false claims and records throughout its term.
According to the complaint, Horizon won the 2020 contract for the State Health Benefits Program (SHBP) and School Employees’ Health Benefits Program (SEHBP) by falsely representing that it would comply with a new “lesser of” provision — a cost-saving requirement that capped reimbursements at the lower of either a provider’s billed charge or the negotiated rate between the TPA and the provider.
The state alleges Horizon knew it could not meet that requirement before bidding but concealed that fact, intending to issue refunds after the fact if needed. As a result, the company received nearly $500 million in administrative fees over four and a half years while allegedly submitting more than a thousand false claims.
The complaint also alleges Horizon issued misleading Explanation of Benefits (EOBs) to plan members, showing “Plan Paid” amounts that matched provider charges even when the state paid more.
In April 2021, the Division of Pensions and Benefits began investigating whether Horizon was complying with the 2020 contract, including requirements for cost-saving provisions and member-navigation services.
Several months later, in November 2021, five private relators filed a qui tam lawsuit under the NJFCA, prompting a state investigation. While the federal government declined to intervene, New Jersey continued to probe the claims, ultimately filing its own complaint on November 7.
Under the agreement:
- Horizon will pay $100 million to the state within 25 days.
- The company has already stopped the practices at issue — including “lesser of” violations and inaccurate EOBs.
- Horizon must fully comply with the “lesser of” provision under its current 2024 contract, awarded last December.
- The settlement imposes extensive oversight requirements, including monthly, daily, quarterly, and contract-wide verification reports through the end of 2025.
- Horizon must follow specific corrective steps if any discrepancies arise under the 2024 contract.
- The company is prohibited from committing any future NJFCA violations related to its state health-benefits contracts.
The state agreed to pay $12 million to five relators — Kevin Lyons, Patrick Colligan, Mark Kovar, Mark Flores, and Vince Flores — a reduced percentage that increases the share retained by taxpayers. The state declined to provide a relator share to former DPB Assistant Director Christin Deacon, who learned of Horizon’s conduct while administering the contract in her official capacity.
Attorney General Platkin said the alleged actions harmed both taxpayers and hundreds of thousands of public employees.
“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,” he said.
State Treasurer Elizabeth Maher Muoio credited the Division of Pensions and Benefits for pursuing the issue aggressively since 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,” she said.
Horizon administers health benefits for more than three million New Jersey residents, including more than 750,000 active state employees, early retirees, and dependents. The company oversees billions of dollars in annual medical spending.
The settlement does not include an admission of wrongdoing by Horizon but closes a years-long dispute over alleged overbilling and false claims tied to one of the state’s largest and most consequential contracts.