Aetna Wins $41M in Lawsuit Against Texas Hospital

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By Jacklyn Wille

Aetna Life Insurance Co. can collect up to $41.4 million from a small Texas hospital that engaged in a dishonest billing scheme, a federal judge ruled Dec. 31 ( Aetna Life Ins. Co. v. Humble Surgical Hosp., LLC , 2016 BL 436734, S.D. Tex., No. 4:12-cv-01206, 12/31/16 ).

In a heated opinion—which described the hospital as “filthy up to the elbows from lies and corrupt bargains”—the judge found that Humble Surgical Hospital LLC ran a kickback scheme with referring physicians that allowed it to submit inflated bills to Aetna.

The judge gave Aetna the option of recovering one of three remedies against the hospital: $41.4 million, representing everything it paid to the hospital; $20.2 million, representing the difference between what Aetna paid the hospital and what it would have paid if the hospital had been treated as in-network; or $12.4 million, representing the amount of kickback payments that the hospital gave to the referring physicians.

This resounding loss for Humble comes seven months after it won $13.6 million in similar litigation against Connecticut General Life Insurance Co. In that case, Cigna sued Humble for more than $5 million in overpayments, but a different Texas-based federal judge instead held Cigna liable for underpaying claims and failing to provide health plan documents.

That 2016 victory for Humble formed the basis for a new lawsuit against Cigna involving more than 100 employer-sponsored health plans, including those of JPMorgan Chase, Morgan Stanley, Chevron Corp., DHL Worldwide Express and Macy’s Inc. The victory also factored heavily in a subsequent decision favoring another Houston hospital involved in a $50 million lawsuit with Cigna.

Judge Lambastes Hospital

In his fiery opinion, Judge Lynn Hughes of the U.S. District Court for the Southern District of Texas found that Humble operated a “dishonest” billing scheme that “tricked” Aetna into overpaying for claims.

According to Hughes, Humble is a five-bed hospital outside Houston that created a series of shell companies through which more than 100 physicians received 30 percent kickbacks in exchange for referring patients to Humble. Under the scheme, Humble billed patients at or near in-network rates while submitting inflated reimbursement requests to Aetna, Hughes said.

In addition to awarding Aetna a multimillion-dollar judgment, Hughes had choice words for Humble, which he said “conducted guerrilla warfare against this court, Aetna, the patients, and common decency.” Humble’s misdeeds include deliberately obstructing discovery, defying court orders and attempting to relitigate its losses in other courts, Hughes said.

Andrews Kurth Kenyon LLP represented Aetna. Bateman Pugh PLLC represented Humble.

To contact the reporter on this story: Jacklyn Wille in Washington at jwille@bna.com

To contact the editor responsible for this story: Jo-el J. Meyer at jmeyer@bna.com

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