BILLING AND COLLECTIONS

Aetna Sues Manager of Oklahoma Rural Hospital for Lab Test Ripoff

Case: People’s Choice, a management firm specializing in turning around financially strapped hospitals, is being sued by Aetna for using an Oklahoma rural hospital client to carry out an elaborate lab billing fraud. In a bid to keep Newman Memorial Hospital afloat, People’s Choice sent blood and urine samples to other labs and falsely claimed that Newman processed the tests, the suit contends. Aetna says that over a 16-month period, it lost $21.6 million on over 10,000 lab, in some cases paying $2,250 for tests it thought were done at Newman rather than the $120 it would have paid a larger lab to do the test. People’s Choice denies the allegations and has already settled with Newman.

Significance: False billing of lab tests has been a perennial lightning rod for litigation. What’s changing, however, is not the defendant but the plaintiff. What we’re seeing is the plateau-ing of federal and state enforcement against labs accompanied by a steadily growing percentage of civil lawsuits by private parties, especially insurance companies. Because they charge premium rates, rural outreach hospitals are often at the center of these cases.

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