Whistleblowers Sue NYC Employees’ Insurer Over Alleged Gross Mismanagement

By the C|C Whistleblower Lawyer Team

Three whistleblowers, representing New York under the state’s False Claims Act, have filed suit against GHI, its parent company, EmblemHealth, and their partner, Empire Blue Cross Blue Shield. The suit alleges that the insurers engaged in a scheme to provide sub-standard healthcare to city employees and retirees while collecting billions in premiums. These insurers’ plan covers about three quarters of NYC employees and retirees.

In a recently unsealed complaint, the whistleblowers allege that the insurance companies overstated their expenses by an average of $55M annually from 2008 to 2014. Also, the complaint alleges that the companies failed to deliver the coverage mandated under their contracts, and therefore taxpayers are entitled to a portion of paid premiums as refunds.

One plaintiff, Kami Barker, has spinal-muscular atrophy and is in a wheelchair and in 2012 she was also diagnosed with several neurological disorders. She incurred over $1.5M in medical bills, including $300k in personal liability, over issues with out-of-network providers. The insurance company mailed checks to Barker’s come, and made her responsible for supplementing the and forwarding the checks to the insurer. Barker contends that these actions were outside the scope of the contract.

The lawsuit was initially filed in 2014 and remained under seal until recently, allowing both New York City and State to review the allegations. Neither the City or State have decided to intervene in the action, but both continue to monitor the case. The companies also face a class action lawsuit in federal court over unfair and deceptive practices. The city continues to renew its contract with the insurers.

Tagged in: FCA State, Financial and Investment Fraud,