Attorney General Matthew J. Platkin announced today that Horizon Healthcare Services, Inc., which does business as Horizon Blue Cross Blue Shield of New Jersey, agreed to pay New Jersey $100 million to settle allegations that it fraudulently induced the State to enter into a 2020 contract to administer the State’s employee benefit programs, and then systematically overcharged the State for healthcare claims throughout the life of that contract. Today’s agreement is the State’s largest-ever non-Medicaid False Claims Act settlement.
The agreement settles allegations that Horizon violated New Jersey’s False Claims Act (NJFCA), which guards against fraud against the government.
While the federal government declined to pursue this matter, the State filed its own Complaint in Intervention in U.S. District Court, alleging three counts of violations of the NJFCA, including fraudulent inducement, presentment of false claims, presentment of false records or statements, as well as claims for breach of contract and unjust enrichment. The complaint has been under seal since it was filed; both the complaint and the settlement were unsealed today.
“At a time when everyone is rightly concerned about the cost of their healthcare, it is simply unacceptable that an insurance company would seek to defraud our State and overcharge us while driving up the costs of healthcare for hundreds of thousands of dedicated public servants,” said Attorney General Platkin. “We will not hesitate to hold accountable anyone who breaks the law and harms our residents, no matter how big or powerful you are. I would like to thank our legal team and the Treasury Department for investigating this case and delivering historic relief for our residents.”
“I want to thank the staff of Treasury’s Division of Pensions and Benefits, who have aggressively investigated this matter since the spring of 2021,” said New Jersey State Treasurer Elizabeth Maher Muoio. “The Division has been, and continues to be, laser-focused on enforcing its contracts and ensuring that our health benefits plans and our members are protected.”
In 2019, the Division of Pensions and Benefits (DPB) released specifications for a new contract for a third-party administrator (TPA) beginning on January 1, 2020, to manage benefits for the State Health Benefits Program (SHBP) and the School Employees’ Health Benefits Program (SEHBP). For the first time, the requirements for the new contract included a cost-saving mechanism, which Horizon and all other bidders were informed about, known as the “lesser of” provision. Essentially, it meant that the TPA could only charge the State the smaller (or lesser) amount between the rate charged by a provider and the amount negotiated ahead of time between the provider and the TPA.
In other words, if a healthcare provider charged $500 for a medical service, and the TPA and provider negotiated a rate of $1,000 for the service, the “lesser of” provision required the TPA to seek reimbursement from the taxpayer-funded health plan in the lower amount of $500, rather than the higher negotiated rate between the TPA and the provider, $1,000.
As part of its bid and pursuant to that provision, Horizon promised to ensure that the State would never pay more for healthcare services than the amount a provider charged. However, Horizon never had any intention of adhering to the bid requirements. As alleged in the complaint, Horizon analyzed claims data before submitting a bid for the new contract and found that it could not comply with the “lesser of” requirement. Nevertheless, Horizon bid on the contract anyway, and won. The complaint shows that Horizon executives discussed potentially making the State “whole” later on, if necessary, by retroactively issuing refunds for overbilling.
This concealment allowed Horizon to fraudulently secure the multiyear, multibillion-dollar contract and receive nearly $500 million in TPA fees from the State over the next four and a half years. During that time, Horizon submitted over a thousand false claims for payment to the State, as well as false records in support of those claims. Moreover, Horizon knowingly issued numerous fraudulent Explanation of Benefits (EOBs) to members of the health plans, misrepresenting how much the State was paying on their behalf by showing a “Plan Paid” amount equal to providers’ “charged amount,” even when the plans paid more.
What Happened After the 2020 Contract Was Awarded
Around April 2021, DPB, in consultation with the New Jersey Treasurer’s Office, began investigating whether Horizon was violating the 2020 contract by, among other things, failing to provide the requisite navigation and advocacy services (also a new requirement under the 2020 contract) and billing the State for more than what was allowed.
Later that year, in November 2021, a group of private parties, called relators, sued pursuant to the qui tam provisions of the NJFCA, which allows relators to file lawsuits on behalf of New Jersey for violations of the NJFCA and to share in certain recoveries. The lawsuit was also brought under federal law on behalf of the federal government, which declined to pursue the matter.
Over the course of the next several years, the State conducted a robust investigation of the relators’ claims, but was unable to find evidence to support their specific allegations, aside from certain violations of the 2020 contract that the State had already begun probing in April 2021. On November 7, 2025, to settle the matter, the State filed its Complaint in Intervention based on the findings of its investigation, along with the executed settlement agreement.
Settlement Terms
The $100 million payment shall be made to the State within 25 calendar days of the effective date of the agreement.
In addition to the $100 million settlement proceeds, Horizon has stopped engaging in “lesser of” violations and issuing inaccurate EOBs. Horizon has also explicitly agreed, among other things, to fully comply with the “lesser of” provision set forth in its current contract with the State, which it was awarded on December 14, 2023 to serve as the co-TPA of the State’s health plans. The settlement also includes injunctive provisions that include monthly verification reports, daily verification reports, quarterly verification reports, and a verification report from the commencement of the 2024 Contract through December 31, 2025, all to provide DPB with data to verify Horizon’s compliance with “lesser of” under the 2024 Contract. In addition, the settlement established certain requirements for Horizon to follow in the event DPB identifies any 2024 “lesser of” discrepancies or issues. Finally, Horizon shall not engage in any violations of the NJFCA relating to the 2024 Contract or any future contract with DPB, including with respect to the relevant “lesser of” provision.
As part of the settlement terms, the State agreed to pay a $12 million relator share to five of the six relators who filed the qui tam complaint – Kevin Lyons, Patrick Colligan, Mark Kovar, Mark Flores, and Vince Flores. The State declined to provide any portion of this relator share to a former Assistant Director of Health Benefits at the DPB, Christin Deacon, who was the DPB administrator for the 2020 contract and had become aware of the fraudulent conduct by Horizon during the course of her duties at the DPB. In addition, this relator share amount is less than the statutory share because the State was unable to find support for relators’ allegations other than those the State was already investigating prior to the filing of relators’ lawsuit.
Horizon facilitates the delivery of healthcare to more than three million individuals in New Jersey – including over 750,000 active State employees, early retirees, and their family members – and oversees billions of dollars each year in medical spending.
Assistant Attorney General Lara J. Fogel led this matter on behalf of the State, along with Deputy Attorneys General Brian DeVito, Emma Y. Xiao, and Catriona Coffey of the Division of Law’s Affirmative Civil Enforcement Practice Group under the supervision of Deputy Director Sara M. Gregory, and with assistance from Assistant Attorney General Beth Leigh Mitchell of the Division of Law’s Financial Affairs Practice Group under the supervision of Deputy Director Kavin K. Mistry.
