Cleveland Imaging and Surgical Hospital LLC., a four-bed hospital in Cleveland, Texas, and three clinics were ordered Aug. 20 to pay Aetna $8.4 million for fraudulent billing practices.
A judge ruled the hospital violated Texas law by selling the right to use its license-derived billing codes to the clinics – Trinity Healthcare Network, ER DOC 24/7 PLLC, and Premier Emergency Room and Imaging – in exchange for a 15% cut of the reimbursements.
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A judge ruled the hospital violated Texas law by selling the right to use its billing codes in exchange for a 15% cut of the reimbursements.
Using the hospital’s provider number made it appear that treatment happened at a full service hospital, rather than the unlicensed clinics, according to an opinion by U.S. District Court, Southern District of Texas Judge Lynn N. Hughes.
In his judgment, Judge Hughes said doctors and clinics may not contract to use a hospital’s billing code to recover fees that were designed to compensate hospitals for expenses the clinics do not have. Aetna will recoup $5.7 million in emergency fees and $2.6 million in nonemergency fees from the health providers.
The hospital does not own or operate the clinics, and physicians who own the hospital have no interest in ER DOC or Trinity. Three of the owners of the hospital and two other doctors own Premier, the opinion said.
Attorneys for the hospital and clinics did not return calls seeking comment.
Aetna filed suit in 2012 against Cleveland Imaging and Surgical Hospital LLC., Trinity Healthcare Network, ER DOC 24/7 PLLC, and Premier Emergency Room and Imaging for allegedly defrauding Aetna by wrongfully posing as emergency rooms and billing at inflated rates. The insurance company said the clinics were violating state law by using the hospital’s license-derived billing code in exchange for 15% of each bill. Within a 2-year period, the hospital, on behalf of the clinics, billed Aetna for $9.2 million, according to court documents. In the year before the license arrangement, the clinics billed the insurer for $387,000.
In a statement, Aetna spokeswoman Cynthia Michener said the company was pleased with the ruling.
"Freestanding ERs trying to circumvent the law and collect facility fees without a state license or any real affiliation with hospitals is outrageous and unacceptable," she said. "This type of fraudulent behavior contributes to the increase in health care costs at a time when the nation is focused on reducing costs."
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