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Pa. Insurer Settles Medicare Claims

September 4, 1998

HARRISBURG, Pa. (AP) _ Pennsylvania’s largest health insurer agreed to pay a $38.5 million fine to settle allegations that it manipulated Medicare claims reports given to federal auditors.

The agreement between the federal government and Highmark Inc. was part of a two-year investigation, U.S. Attorney David Barasch said Thursday. Other employees could still be charged.

In addition, a former vice president of Pennsylvania Blue Shield pleaded guilty to making false statements in connection with Medicare. The former official, Judith Krafsig-Kearney, faces up to three years in prison and a $300,000 fine.

Highmark, which was formed two years ago from the consolidation of Pennsylvania Blue Shield and Blue Cross of Western Pennsylvania, cooperated after whistleblowers within the company alerted authorities, Barasch said.

Barasch said Blue Shield misled auditors by picking out error-free files and telling auditors they were randomly selected. In order to get federal funds, the insurer is supposed to randomly pick claims for inspection.

Most of the fine against Highmark will go into the Medicare Trust Fund, which finances billions of dollars a year in medical services for the elderly and the disabled.

Highmark serves 3 million Medicare clients in Pennsylvania and New Jersey.

Attempts to reach Ms. Krafsig-Kearney were unsuccessful. Her phone was repeatedly busy Thursday and her attorney did not return a phone message left at his office.

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