Coventry Health Care Inc.
) announced a $3 million civil settlement agreement with the U.S.
Attorney's Office (AO) for the District of Maryland, Northern
Division. The settlement pertains to an investigation initiated
by the AO in 2008 into the operations of First Health Priority
Services. The AO was investigating the procedure for verifying
the eligibility for the company's Workers' Compensation Medicare
Set-Aside Arrangement (MSA) product.
Coventry had acquired First Health's Workers' Compensation
business in 2005 and as a result it also received a subpoena
regarding the investigation. The investigation revealed that
certain employees of the company accessed the Centers for
Medicare and Medicaid Services (CMS) Common Working File, thereby
violating the company's policy. The employees accessed the files
to check whether Workers Compensation claimants received Medicare
Coventry has authorization to access certain CMS databases as
a result of its Medicare business. Select employees of the
company are allowed to access these databases to obtain data for
purposes sanctioned by the CMS. However, some employees violated
the company's policy due to which Coventry had to agree to the
settlement, thereby closing the matter as far as the government
is concerned. The company had already set aside the required
amount earlier as reserves. Moreover, the company does not sell
the MSA product anymore.
While Coventry will not face any civil or criminal charges
related to the matter, the company has given the pink slip to the
concerned employees. It has also adopted certain new measures,
controls, policies and trainings in order to avoid future breach
of its policy.
) also agreed to pay $90 million as settlement payment pertaining
to a lawsuit against its subsidiary - Anthem Insurance - in June
this year, according to Reuters. In 2005, former members of
Anthem had filed a class-action lawsuit claiming that they did
not receive adequate compensation for their ownership stake in
the company during its conversion from a mutual company to a
stock company in 2001.
Coventry carries a Zacks #3 Rank (short-term Hold), along with
a long-term 'Neutral' recommendation.
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