Arthur J. Gallagher & Co. has distanced itself from a US Department of Justice settlement involving AssuredPartners of South Florida (APSF), a former subsidiary at the center of an ACA fraud scheme that cost the federal government more than $141.5 million in unwarranted subsidies.
The DOJ announced on April 7 that APSF agreed to plead guilty to one count of major fraud against the United States. Its then-parent, AssuredPartners Inc., agreed to pay $135 million to resolve civil allegations under the False Claims Act. APSF will pay $27.6 million in criminal restitution, bringing the total above $160 million.
The DOJ said that from February 2021 through September 2022, APSF employees submitted applications falsely representing that consumers earned just above the federal poverty line to secure the highest possible subsidy amounts.
Employees also submitted false information to Florida's Medicaid program to generate denial letters, which were then used to trigger special enrollment periods allowing year-round sign-ups.
The agency targeted vulnerable individuals experiencing homelessness, unemployment, and substance abuse disorders. Street marketers working on APSF's behalf offered cash and gift cards to induce enrollment.
The fraud did not originate at APSF. The DOJ stated that APSF acquired certain assets of a legacy entity in February 2021 and that the scheme's architect, former president Cory Lloyd, continued the conduct at APSF.
The department cited APSF's failure to conduct adequate acquisition diligence or detect what it described as an open and pervasive scheme.
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Lloyd was convicted at trial in November 2025 alongside marketing company CEO Steven Strong. Both were sentenced to a combined 20 years in prison and ordered to pay $180.6 million in restitution in connection with a broader $233 million ACA fraud scheme at the legacy entity, the DOJ said at the time of sentencing.
A third individual, executive vice president Dafud Iza, had previously pleaded guilty and was sentenced to 35 months.
Gallagher closed its $13.45 billion acquisition of AssuredPartners in August 2025. The company said it identified the government's investigation during pre-acquisition due diligence and excluded APSF from the transaction.
"APSF was not included in Gallagher's acquisition of AssuredPartners, and Gallagher has never owned APSF," the company said. It added that the settlement amount was fully reserved under the purchase agreement and does not affect the price paid.
The deal faced its own regulatory scrutiny. Gallagher's acquisition was initially expected to close in early 2025 but was delayed after a second request from the Federal Trade Commission under the Hart-Scott-Rodino Act. It closed without conditions in August.
The settlement resolves allegations brought by a whistleblower under the False Claims Act's qui tam provisions, which allow private individuals to sue on behalf of the government. The whistleblower will receive $24.3 million.
ACA fraud has drawn heightened enforcement attention. The DOJ's Health Care Fraud Unit charged 194 individuals in 2025 with crimes involving more than $15 billion in intended losses, up from $3.3 billion the year prior. False Claims Act recoveries reached a record $6.8 billion in fiscal year 2025.
