Health Care Providers Ordered to Pay Insurer $8.4M for Billing Fraud

Three health care providers were forced to pay a judgment for defrauding an insurance company of millions of dollars. A Texas Federal Judge found that the defendant health care providers were wrongfully posing as emergency rooms in order to bill the insurance company at higher rates, in violation of Texas law. The judge stated that a hospital sold the right to use its license-derived billing codes to various clinics in exchange for 15 percent of each of the clinics’ bills. The clinics then used these billing codes as if the clinics were hospital emergency rooms when billing the insurance company. The court stated that doctors and clinics may not contract to use a hospital’s billing code to recover fees designed to compensate hospitals. The fees are in place to compensate hospitals for expenses only applicable to hospitals, not to clinics. The judge found that the arrangement between the clinics and hospital violated Texas Health and Safety Code. The insurer sued for fraud, negligent misrepresentation, money had and received, unjust enrichment, and civil conspiracy. The Judge awarded the insurer $8.4 million from the clinics and hospital – $5.8 million in emergency fees and $2.6 million in nonemergency fees. The award only resolves the claim for money had and received. Aetna Life Insurance Co., v. Cleveland Imaging and Surgical Hospital LLC, et al., Civil Action H-12-2451, United States District Court, Southern District of Texas

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