Beware Of Private Insurance Kickbacks
In Aetna Life Insurance Company v. Humble Surgical Hospital, Civil Action H-12-1206, U. S. District Court, S.D. Texas, Aetna won a lawsuit against a Texas hospital, Humble Surgical Hospital, based on kickbacks paid by the hospital to referring physicians. This decision shines a spotlight on the fact that providers that receive payments from insurers may have liability for the payment of kickbacks.
Humble did not have a contract with Aetna, so Humble was paid considerably more than hospitals that were in Aetna’s network. Humble paid referral fees to doctors and waived patients’ charges in order to help insure a steady stream of referrals, since they were out-of-network.
In fact, Humble provided referring physicians with written proposals offering them 30% of facility fees it collected from Aetna in exchange for referrals. The doctors paid Humble $3,500 per year in “administrative and investment fees” to be entitled to receive these kickbacks. Physicians received payments through shell companies that they established.
Humble certified that each claim was “true, accurate, and complete.”
The Court determined that shell companies established by physicians for receipt of payments from Aetna could not legally receive such payments because they were not licensed. In addition, there were no assignments from patients to the shell companies and no assignments from the shells to Humble.
Here is what the Court said about this arrangement: “Humble has no defense….Aetna’s hands are clean. Humble is filthy up to the elbows from lies and corrupt bargains.”
The Court went on to say that:
…From the beginning Humble has been recalcitrant and obstreperous. Through six sets of lawyers, countless orders, hearings and conferences, Humble’s behavior has ranged from openly defiant to evasive - always feigning compliance. The court has admonished Humble time and time again…This case has had a tortured existence, and the bulk of the activity has been trying to force Humble to tell the truth. Humble has conducted guerrilla warfare against this court, Aetna, the patients and common decency.
The Court concluded that Aetna could take, at its election, one of the following from Humble:
$41,411,650.98 – the amount Aetna paid Humble from August, 2010, through October, 2013
$20,248,259.65 – the difference between what Aetna paid Humble as an out-of-network provider from August 2, 2010, to May 11, 2012, and what it would have paid Humble as an in network provider
$12,423,295.29 – the thirty percent (30%) kickbacks paid by Humble with Aetna’s money
Just imagine which option Aetna chose!
The “bottom line” is that providers that obtain patients through illegal remuneration to them or their doctors may not be paid under insurance plans. In short, the rules prohibiting kickbacks extend far beyond the Medicare and Medicaid Programs and other state and federal healthcare programs.
Elizabeth E. Hogue, Esq.