Coventry Enters Into Civil Settlement Agreement With U.S. Attorney’s Office
for the District of Maryland, Northern Division
Agreement resolves previously disclosed investigation into processes related
to Workers’ Compensation Set-Aside product
BETHESDA, Md. -- November 19, 2012
Coventry Health Care, Inc. (NYSE: CVH) has entered into a civil monetary
settlement agreement with the U.S. Attorney’s Office for the District of
Maryland, Northern Division. This agreement is the result of a previously
disclosed subpoena and subsequent investigation into the Company’s operational
process for confirming Medicare eligibility for its Workers’ Compensation
set-aside product. The Company fully cooperated with the investigation.
According to the agreement, Coventry will pay a $3 million fine which had been
previously accrued by the Company, and no civil or criminal charges will be
filed. The Company has been informed by the U.S. Attorney’s Office that with
this agreement, the matter is closed at all governmental levels and agencies.
In 2008, the U.S. Attorney’s Office began an investigation into practices of
First Health Priority Services, relating to its Medicare Set-Aside Arrangement
(MSA) product. This product entered Coventry’s portfolio as part of its
acquisition of the First Health Workers’ Compensation business in 2005, and
since that time it has represented less than 0.25% of Coventry’s consolidated
revenues. Coventry no longer sells this product.
Under federal law, insurance companies that are working to settle a workers’
compensation claim are required to account for whether that injured person is
a Medicare beneficiary. If the claimant is a Medicare beneficiary, the insurer
must “set aside” an appropriate amount of funds to ensure that Medicare does
not pay for those medical costs. This information, submitted in the form of an
MSA, is then provided to the Centers for Medicare & Medicaid Services (CMS).
As part of the Company’s normal course of business in serving the Medicare
population, select Coventry employees are granted access to CMS databases in
order to obtain certain data and information for purposes authorized by CMS.
In 2005 and 2006, a small number of Coventry employees accessed the CMS Common
Working File, later renamed the Medicare Beneficiary Database, for the purpose
of determining whether Workers’ Compensation claimants were Medicare
The conduct by these employees was a violation of Company policy, and Coventry
has put several new measures, controls, policies and trainings into place to
prevent violations in the future. Individuals responsible for the violations
were reprimanded and are no longer employed with the Company.
About Coventry Health Care
Coventry Health Care (www.coventryhealthcare.com) is a diversified national
managed health care company based in Bethesda, Maryland, dedicated to
delivering high-quality health care solutions at an affordable price. Coventry
provides a full portfolio of risk and fee-based products including Medicare
and Medicaid programs, group and individual health insurance, workers’
compensation solutions, and network rental services. With a presence in every
state in the nation, Coventry’s products currently serve approximately 5
million individuals helping them receive the greatest possible value for their
health care investment.
Coventry Health Care, Inc.
SVP, Corporate Finance
VP, Corporate Communications
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