This past Friday, April 15, 2016, a Santa Clara County, California jury awarded the insurer Aetna a $37,452,199.00 judgment in a lawsuit against Bay Area Surgical Management, LLC, a surgery center management company, a number of its managed ASCs, and three of Bay Area’s executives.
The ASCs were out of network as to Aetna plans.
Aetna complained that Bay Area’s centers charged exorbitant prices for out of network procedures. Aetna argued that the oversized amounts paid by it to the ASCs resulted in higher than normal distributions to referring physicians, and were therefore kickbacks for their referrals. Interestingly, no physician was named as a defendant.
Aetna also alleged that Bay Area’s centers failed to disclose the referring physicians’ interests in the facilities and routinely waived co-pays thereby rendering claims to Aetna fraudulent.
For example, a $20,000 charge with a waived 30% co-pay resulted in a $17,000 claim to Aetna. Because the $17,000 was not net as to an actual co-pay, Aetna’s position was that the $17,000 was a fraudulent claim; the “real” claim should have been $17,000 less the 30% co-pay, or $11,900. The routine waiver of co-pays was also an inducement to the insureds to use the higher priced out of network facilities.
Note that although the case was tried in a California state court, does not set a precedent, and will almost certainly be appealed, it signals a number of issues for ASCs and other healthcare facilities and providers everywhere:
1. Out of network facilities and practices are under attack by payors.
2. The routine waiver of co-pays is a dangerous business practice.
Court filings indicate that the defendants will file motions to attack the judgment. If those motions are unsuccessful, it’s highly likely that they will file an appeal.
