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Blue Cross Blue Shield of Illinois settles coverage-denial claims for $25M

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CHICAGO (Crain's)—Blue Cross Blue Shield of Illinois agreed to pay $25 million to settle state and federal claims that the insurance company knowingly denied coverage for a decade to sick kids.

The deal, in which Blue Cross Blue Shield does not admit any wrongdoing, was announced Thursday by the Illinois attorney general's office and the U.S. attorney's office. The firm reached the agreement to avoid a lengthy and costly court process, according to the settlement document.

The state of Illinois will receive $15.5 million in the settlement, with the remaining $9.5 million going to the United States.

Blue Cross Blue Shield said in a statement that it was "pleased" to put an end to the matter.

"This dispute began many years ago when we reviewed certain claims and determined that the benefits sought were not covered by the applicable insurance plans and policies," the insurance firm said in its statement. "Several years ago, in cooperation with the state attorney general, we expanded our explanation of benefits to ensure that our members understood what nursing benefits are covered under their plans. That action, coupled with today's agreement, are in the best interests of our members."

Blue Cross Blue Shield, a division of Chicago-based Health Care Service Corp., was accused of fraudulently denying private skilled-nursing care to customers who were eligible; using guidelines that were more restrictive than the benefit terms given to customers; influencing the outcome of appeals and external reviews when denied claims were challenged; knowingly referring customers that should be covered by Blue Cross Blue Shield insurance to Medicare; and submitting false claims to Medicaid.

The complaints covered in the claim are alleged to have occurred from Jan. 1, 2000, to March 16, 2010.

Lorene Yue is a reporter for Crain's Chicago Business, a sister publication of Business Insurance.