Three whistleblowers representing New York City employees and retirees are suing the city’s top health insurance providers for defrauding taxpayers of more than a billion dollars.

The lawsuit unsealed in New York Supreme Court last month alleges that GHI, along with parent company EmblemHealth and their partner, Empire Blue Cross Blue Shield, engaged in a long-running scheme that provided inadequate healthcare to city employees and retirees — while collecting $3 billion in premiums from the city each year. The GHI-Empire plan covers 600,000 people — about 75 percent of city workers, retirees and families.

In a 63-page complaint, the plaintiffs say the companies filed false claims to overstate their expenses by an average of $55 million dollars a year between 2008 and 2014. And instead of returning that money to the city, as required under their contract, the suit says they kept it. In addition, the claim alleges that the companies failed to deliver the insurance coverage mandated under their contract, and therefore taxpayers are entitled to a portion of those billions in premiums paid annually by the city.

The case was brought under the New York State False Claims Act. If found guilty, the three companies could be on the hook for three times the damages incurred by the government, up to $4 billion.

The lawsuit was originally filed in October 2014 and has been kept under seal pending a review by the City Law Department and the New York Attorney General’s Office. Both offices could have opted to take up the matter as an enforcement action or join the lawsuit. Neither has, but both say they continue to monitor the case.

“Real people are being impacted, are being harmed, by being subjected to lousy health insurance coverage and unexpected surprise bills at the end of the day,” said Edward Scarvalone, an attorney for the plaintiffs and a partner at the firm of Willens & Scarvalone LLP.

One of the plaintiffs is Ariella ‘Kami’ Barker, who has spinal muscular atrophy and has used a wheelchair since she was a kid. In the spring of 2012, when she was 32, she was diagnosed with a series of neurological disorders, including a condition called trigeminal neuralgia, referred to by some as the “suicide disease” because it causes severe pain in the face.

Over the next 18 months, Barker spent time in six different hospitals in four different states, including emergency room visits. Barker made a habit of calling hospitals before going in for treatments to confirm they were “in-network,” only to later learn that the individuals providing the care at those hospitals were “out-of-network.”

She incurred $1.5 million in medical bills. The insurance companies told her she was liable for nearly $300,000 for her treatments. At the same time she was hospitalized, the companies were mailing checks to her home that only covered a small portion of what she was being charged for the services, and she was responsible for mailing those checks on to the providers, while paying the difference.

“That task alone, even if you are entirely healthy, is insane,” Barker told WNYC by phone. “And I did it from bed. I just had piles of envelopes and paperwork that I was trying to sort through.”

This lawsuit is not the first time GHI and Empire have faced legal scrutiny. Since 2009, the state Attorney General’s office has investigated and reached settlements with the companies four times. During one of its investigations, the AG found GHI’s reimbursement rates were set in 1983 — when costs were much lower than they are today.

GHI is also being sued in a class-action lawsuit by a group of New York City employees and retirees in federal court in Pennsylvania, over what the suit calls “unfair and deceptive practices.”

Still, the city has repeatedly renewed the contract with the health insurance companies. Scarvalone, the plaintiffs’ attorney, said that’s one of the issues this lawsuit will explore.

“Why is it that the GHI contract has been renewed year after year after year, and in particular, what oversight does the city give to the manner in which GHI lives up to its contractual obligations,” said Scarvalone.

City Hall spokeswoman Freddi Goldstein said the Office of Labor Relations, which administers these contracts, researches individual complaints and responds directly to members. Members can either call or email their concerns through the OLR website. She also said the city has not received complaints related to reimbursements under the GHI-Empire plan since 2014.

City officials point to the documentation about the plan provided through the OLR website.  Emblem Health, GHI’s parent company, also offers a webpage for NYC employees that provides information about coverage, benefits and an out of network calculator. That calculator provides the out of network reimbursement rates for the service the member is requesting.

City Councilman Justin Brannan, chairman of the contracts committee, said he’s prepared to call oversight hearings to get to the bottom of the matter.

“If we find out that GHI has somehow defrauded more than 600,000 New York City employees and retirees and their families and we find out that these folks have been cheated, than there is going to be hell to pay,” Brannan told WNYC.

Courtney Jay, director of corporate communications at parent company Emblem Health, said the charges are completely false and pledged a vigorous defense.

A spokesperson for Empire declined to comment.

FULL DISCLOSURE: Jonathan Willens, an attorney for the plaintiffs, is the brother of an editor in the WNYC newsroom.