WASHINGTON — A former Part B Medicare carrier has agreed to pay $79 million to settle allegations that the company filed claims improperly and then covered up the mistakes, the U.S. Department of Justice announced last month.

The result of a three-year investigation into events that occurred at St. Louis-based General American Life Insurance between 1984 and 1986, this settlement is the second largest amount a carrier ever has paid to settle Medicare fraud allegations, the DOJ said.

The two former General American employees who uncovered the alleged fraud and filed suit against the company in 1999 under the whistleblower provision of the False Claims Act will receive 19 percent, or $14.4 million, of the $76 million settlement.

In 1984, prior to implementing the alleged scheme, General American ranked 38th among Medicare carriers for overall performance, accuracy and timeliness. But after company employees allegedly deleted substandard claim files, General American soared to No. 2 in Medicare's 1986 carrier ranking. “This favorable ranking assisted General American in retaining its Medicare contract and competing for additional contracts throughout the company,” the DOJ said.

Federal officials are hailing the settlement as proof that no one can escape health-care-fraud investigators' scrutiny. “As today's $76 million settlement illustrates, the government expects absolute integrity on the part of both government contractors and health care providers,” said Janet Rehnquist, Department of Health and Human Services Inspector General. “Wrong doers should expect that, taxpayers should demand that and beneficiaries should settle for nothing less.”

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