FOR IMMEDIATE RELEASE	CIV
WEDNESDAY, SEPTEMBER 28, 1994	(202) 616-2765
	TDD (202) 514-1888

                  MASSACHUSETTS BLUE CROSS, BLUE SHIELD PAYS
                 U.S. $2.75 MILLION TO SETTLE MEDICARE DISPUTE
	WASHINGTON, D.C. -- Blue Cross and Blue Shield of Massachusetts Inc.
will pay the United States $2.75 million to settle allegations the company
submitted false Medicare reports in processing Medicare claims for
Massachusetts, Maine, New Hampshire and Vermont, the Department of Justice
announced today.
	Assistant Attorney General Frank W. Hunger, head of the Civil Division,
and Deputy U.S. Attorney Karen Green of Boston said the settlement resolves a
qui tam lawsuit filed in U.S. District Court in Boston in 1993 by Mary Jane
Backman, a former employee of C & S Administrative Services for Medicare.
C & S is a subsidiary of Massachusetts Blue Shield that contracted with the
Health Care Financing Administration to process Medicare claims.
	"Medicare contractors like Massachusetts Blue Cross are the critical
first line of defense against fraud and abuse in federal health care programs,"
said Hunger.  "They are paid by the United States to process claims and to
detect fraud and abuse by health care providers such as hospitals and doctors.
	"Their importance to enforcement of Medicare rules and regulations
cannot be emphasized too much.  And if they fail in that important role then
it makes it doubly hard for the federal government to detect those who would
abuse the system," he said.
	In her suit, Backman alleged that Massachusetts Blue Shield, based in
Boston, misrepresented and inflated the number of claims and reviews it
processed in periodic reports submitted to HCFA.  Since the federal agency
used the information to determine the company's costs in administering
Medicare, the false data resulted in larger reimbursements than Massachusetts
Blue Shield was entitled to in 1991, 1992 and 1993, according to the suit.  
	 Massachusetts Blue Shield, as part of the settlement agreement, also
agreed to hire more workers to detect and investigate allegations of fraud and
abuse by Medicare providers.  Massachusetts Blue Shield also agreed to cap the
reimbursement it will seek from the Medicare program for the coming year. 
HCFA expects to realize cost savings of approximately $3.3 million as a result
of this separate agreement by Massachusetts Blue Shield.  The Department
estimated the government suffered single damages of $1.4 million.
	Backman filed her suit under a provision of the False Claims Act that
allows private parties to sue companies and individuals that have submitted
false claims to the federal government.	 Of the amount paid to the United
States, Backman will receive $550,000.  
	The False Claims Act permits the recovery of three times the amount of
actual loss to the government plus civil penalties of $5,000 to $10,000 for
each act in violation of the law.  
	The Office of the Inspector General for the Department of Health and
Human Services, which investigates allegations of fraud and abuse in the
Medicare program, and the U.S. Attorney in Boston investigated the case.  
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