Portfolio Media. Inc. | 860 Broadway, 6th Floor | New York, NY 10003 | www.law360.com
Phone: +1 646 783 7100 | Fax: +1 646 783 7161 | customerservice@law360.com
Aetna Wins $8.4M For ER Billing Fraud Conspiracy
By Kelly Knaub
Law360, New York (August 20, 2014, 7:08 PM ET) -- A Texas federal judge on Wednesday ruled
that Aetna Life Insurance Co. can take $8.4 million from three health care providers, for defrauding the
insurer of millions of dollars by wrongfully posing as emergency rooms to bill it at inflated rates.
U.S. District Judge Lynn N. Hughes said that Aetna will take the funds from Cleveland Imaging and
Surgical Hospital LLC, Trinity Healthcare Network, ER DOC 24/7 PLLC and Premier Emergency Room and
Imaging. The judge said the hospital sold the right to use its license-derived billing codes in 2011 to the
clinics in exchange for a 15 percent cut of each bill, in violation of Texas law.
Court documents show that Aetna dismissed its claims against ER DOC in April 2013 after reaching a
confidential settlement, and an attorney who represented ER DOC told Law360 that its appearance on
the judgment may be an error.
“Doctors and clinics may not contract to use a hospital’s billing code to recover fees designed to
compensate hospitals for expenses that they do not have,” the opinion said.
The hospital does not own or operate the clinics, and the five doctors who own the hospital have no
interest in ER DOC or Trinity, according to the opinion. Three of the hospital’s owners partially own
Premier with two other physicians, the opinion says.
Aetna filed the initial suit in August 2012, and Premier was added to the insurer’s amended complaint
that December.
The opinion says the Centers for Medicare and Medicaid Services threatened to revoke Cleveland
Imaging’s status as a provider in July 2012 on the grounds that too many of its patients were not being
admitted to the hospital for treatment. The hospital then canceled its arrangement with the clinics to
reduce its ratio of inpatients to outpatients, according to the opinion.
Although Aetna sued the hospital and clinics for money had and received, fraud, negligent
misrepresentation, unjust enrichment and civil conspiracy, the judge said the opinion will only resolve
the claim for money had and received.
Aetna will take $8,412,116.01 total from the clinics and hospital — $5,761,701.40 in emergency fees and
$2,650,414.61 in nonemergency fees, according to the opinion.
Judge Hughes said that the arrangement between the clinics and hospital violates Chapter 254 of the
Texas Health and Safety Code.
“The billing contract cannot change the objective reality that the clinics are independently owned offices
— offices not qualifying to be rated hospitals,” the judge said. “They have separate doctors,
management, leases, utilities, staffs and equipment — and no license.”
Aetna spokeswoman Anjie Coplin told Law360 that the company is 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," Coplin 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 as
one of the key components of health care reform."
Regarding ER DOC, Coplin said that if the clinic has been released, it will not have to pay the judgment.
An attorney for Trinity and Premier did not immediately return a request for comment Wednesday.
Aetna is represented by John B. Shely, Jeffrey D. Migit and Dena Palermo of Andrews Kurth LLP.
Trinity and Premier are represented by Larry D. Thompson, Roger D. Oppenheim and Katherine L.
Sunstrom of Lorance & Thompson PC.
The case is Aetna Life Insurance Co. v. Cleveland Imaging and Surgical Hospital LLC et al., case
number 4:12-cv-02451, in the U.S. District Court for the Southern District of Texas.
--Additional reporting by Daniel Wilson. Editing by Edrienne Su.
All Content © 2003-2014, Portfolio Media, Inc.