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Coventry Enters Into Civil Settlement Agreement With U.S. Attorney’s Office For The District Of Maryland, Northern Division

Stocks in this article: CVH

Coventry Health Care, Inc. (NYSE: CVH) has entered into a civil monetary settlement agreement with the U.S. Attorney’s Office for the District of Maryland, Northern Division. This agreement is the result of a previously disclosed subpoena and subsequent investigation into the Company’s operational process for confirming Medicare eligibility for its Workers’ Compensation set-aside product. The Company fully cooperated with the investigation. According to the agreement, Coventry will pay a $3 million fine which had been previously accrued by the Company, and no civil or criminal charges will be filed. The Company has been informed by the U.S. Attorney’s Office that with this agreement, the matter is closed at all governmental levels and agencies.

In 2008, the U.S. Attorney’s Office began an investigation into practices of First Health Priority Services, relating to its Medicare Set-Aside Arrangement (MSA) product. This product entered Coventry’s portfolio as part of its acquisition of the First Health Workers’ Compensation business in 2005, and since that time it has represented less than 0.25% of Coventry’s consolidated revenues. Coventry no longer sells this product.

Under federal law, insurance companies that are working to settle a workers’ compensation claim are required to account for whether that injured person is a Medicare beneficiary. If the claimant is a Medicare beneficiary, the insurer must “set aside” an appropriate amount of funds to ensure that Medicare does not pay for those medical costs. This information, submitted in the form of an MSA, is then provided to the Centers for Medicare & Medicaid Services (CMS).

As part of the Company’s normal course of business in serving the Medicare population, select Coventry employees are granted access to CMS databases in order to obtain certain data and information for purposes authorized by CMS. In 2005 and 2006, a small number of Coventry employees accessed the CMS Common Working File, later renamed the Medicare Beneficiary Database, for the purpose of determining whether Workers’ Compensation claimants were Medicare beneficiaries.

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