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The 2006 jury verdict that was the largest ever delivered under the False Claims Act was supplanted this week by a preliminary settlement reached through an appellate court mediation program. The health care insurer Amerigroup Corp., which was sued under the act, said that it agreed to pay $225 million to the United States and the state of Illinois, plus $9 million in plaintiffs’ legal fees, to settle the case without admitting wrongdoing. The case was on appeal in the 7th U.S. Circuit Court of Appeals from the $334 million awarded in the U.S. District Court for the Northern District of Illinois when it was funneled into the mediation program. Tyson v. Amerigroup, No. 02-6074. Amerigroup and lawyers for Cleveland Tyson, the former employee who instigated the lawsuit, said the settlement has not been finalized. Tyson helped the U.S. Attorney’s Office and Illinois Attorney General’s Office bring the legal action against his former employer over the insurer denying benefits to certain pregnant women even as it was receiving payment from the state to provide the services as part of the government-subsidized Medicaid program. Tyson hired Goldberg Kohn in 2005 to take the case, and two attorneys from the firm gained the interest of the government lawyers even though the offices had declined earlier to work on the matter. “It’s especially gratifying to be able to achieve a victory for our client Cleveland Tyson, to demonstrate that his allegations had merit,” said Fred Cohen, a Goldberg Kohn attorney who worked on the case with another lawyer from the Chicago-based firm, David Chizewer. Under the False Claims Act, so-called whistleblowers can provide evidence that an employer or former employer is profiting by defrauding a government entity and seek with government lawyers to bring claims against the employer. Cohen and Chizewer took the Tyson case as their first False Claims Act case after two other Chicago lawyers, Michael Behn and Michael Rosenblat, were unable to persuade U.S. and Illinois attorneys to join the lawsuit. The greater resources and additional evidence that the Goldberg Kohn attorneys were able to contribute to the case helped win government backing for it, Cohen said. Since taking the case, the two attorneys have worked on about nine more false claims cases, he said. Amerigroup’s counsel included Gibson, Dunn & Crutcher‘s Ted Olsen as well as attorneys from Baker Botts and Chicago-based Freeborn & Peters. Lawyers from the firms couldn’t immediately be reached for comment. “One of the things we have focused on is taking cases the government initially declines because sometimes those cases need the resources of a firm like ours,” said Cohen. “The U.S. Attorney’s offices don’t always have all the resources they would like to have and therefore can’t take on every case they would like to take on.”

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