Horizon to pay N.J. $100 million to settle allegations it defrauded state in employee health contract, AG says
TRENTON, N.J. — Horizon Healthcare Services, Inc., which operates as Horizon Blue Cross Blue Shield of New Jersey, has agreed to pay the state $100 million to resolve allegations that it fraudulently induced New Jersey to award a lucrative 2020 contract to administer state employee health benefits and then systematically overcharged the state for medical claims, Attorney General Matthew J. Platkin announced Friday.
The settlement is the largest non-Medicaid False Claims Act recovery in state history.
“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,” Attorney General Platkin said. “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.”
The state alleged Horizon violated the New Jersey False Claims Act by misleading officials during the bidding process and later submitting false claims and supporting documentation. The allegations, detailed in a complaint unsealed Thursday in U.S. District Court, include fraudulent inducement, submitting false claims, and submitting false records, as well as breach of contract and unjust enrichment.
Treasurer Elizabeth Maher Muoio said the Division of Pensions and Benefits (DPB) began investigating the matter in 2021.
“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,” Muoio said. “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.”
Allegations of Overbilling
The dispute centers on the 2020 contract awarded to Horizon to administer the State Health Benefits Program and the School Employees’ Health Benefits Program. For the first time, the contract included a cost-saving requirement known as the “lesser of” provision—mandating that Horizon bill the state the lower of either the provider’s charge or the negotiated reimbursement rate.
According to the complaint, Horizon internally determined it could not meet the requirement but bid on the contract anyway. After winning the multibillion-dollar contract, the state alleges, the company billed higher negotiated rates instead of lower provider charges and issued hundreds of misleading Explanation of Benefits statements to plan members.
Horizon collected nearly $500 million in administrative fees during the four-and-a-half-year period covered by the contract, the complaint says.
How the Case Developed
In April 2021, DPB began investigating Horizon’s compliance with the contract, including its billing practices and its obligation to provide navigation and advocacy services. In November 2021, private whistleblowers filed a qui tam lawsuit under the False Claims Act. While federal authorities declined to intervene, New Jersey filed its own complaint in November 2025 after conducting a detailed investigation.
Settlement Terms
Under the settlement:
- Horizon must pay $100 million to the state within 25 days.
- The company has stopped issuing incorrect benefits statements and violating the “lesser of” provision.
- Horizon must comply fully with the “lesser of” requirement in its current contract, awarded in December 2023.
- The agreement requires monthly, daily and quarterly compliance verification reports through Dec. 31, 2025.
- The state will pay $12 million to five of the six relators involved in the case.
- No relator share will go to former DPB Assistant Director Christin Deacon, who learned of the conduct in her official capacity.
Horizon manages health benefits for more than three million New Jersey residents, including more than 750,000 active state employees, retirees and dependents.
Officials emphasized that the settlement does not constitute an admission of liability by Horizon but resolves the state’s claims.
