UPDATE 1-Amerigroup to settle Illinois suit, to take Q2 charge

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BANGALORE, July 22 (Reuters) - Health insurer Amerigroup Corp (AGP.N) said it reached a deal in principle to settle a civil litigation relating to certain marketing practices of its former Illinois health plan, and take a related charge in the second quarter.

Under the terms of the proposed settlement, the company will pay $225 million to the United States and the State of Illinois , plus about $9 million in legal fees, but admit to no wrongdoing.

During the second quarter, the Amerigroup will take a one-time charge of $199 million, net of an estimated tax benefit of about $35 million. The company said it will pay the settlement from funds previously established to cover costs related to the judgment. The company will also enter into a Corporate Integrity Agreement with the Office of the Inspector General of the U.S. Department of Health and Human Services.

Company spokesman Kent Jenkins said the corporate integrity agreement is for five years and the company has not yet qualified its related expenses.

According to the Office of the Inspector General of the U.S. Department of Health and Human Services, the typical term of a corporate integrity agreement is five years and the compliance measures seek to ensure the integrity of Federal health care program claims submitted by the provider. (Reporting by Jennifer Robin Raj in Bangalore; Editing by Anthony Kurian)