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Aetna Awarded $37.4 Million in Healthcare Fraud Lawsuit

Aetna is the victor in a $37.4 million healthcare fraud lawsuit against Bay Area Surgical Management, which was accused of over-billing and a kickback scheme.

By Catherine Sampson

- Aetna was awarded $37.4 million in a lawsuit against Bay Area Surgical Management and a group of surgical centers, which allegedly conducted various types of healthcare fraud, including overbilling and interfering with contracts.

 Aetna was awarded a $37.4 million healthcare fraud lawsuit against Bay Area Surgical Management.

Last month, a California jury awarded Aetna Life Insurance Company about $37.4 million in damages after Bay Area Surgical Management and a group of Northern California surgical centers, collectively known as Bay Area - were allegedly involved in an out-of-network overbilling scheme.

“Physicians were sold shares in the ambulatory surgical facilities at below-market value, which resulted in disproportionately high returns of several hundred percent per year to the physician owners,” BakerHostetler attorney Robert Wolin said in a rundown of the case. “At least one physician had received an 805 percent return on his investment.”

The providers were found guilty of inducing physicians to refer Aetna insureds individuals to Bay Area facilities through kickbacks.  The jury reached a conclusion for this case after four years of litigation and a month-long trial.

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  • Bay Area recruited numerous doctors to refer their patients for out-of-network procedures at inflated prices. They also allegedly submitted false claims and inflated bills to Aetna. Overall, the group ended up fraudulently billing Aetna millions of dollars, Wolin said.

    The scheme that Bay Area put together was very complex and included several components. Ten defendants faced multiple charges.

    According to a court filing from 2013, Bay Area took part in unfair competition, which was in violation of California’s Unfair Competition Law. The defendants allegedly intentionally interfered with Aetna’s contractual relations with health plan members. Other allegations from the case included fraud, unjust enrichment and declaratory judgement.

    The misconduct did not end there. The verdict also stated that the network of centers conspired to interfere with Aetna’s contractual relations with its participating providers. Additionally, the centers negligently interfered with Aetna’s prospective economic relations with its participating providers by engaging in wrongful conduct.  

    In February 2012, Aetna sued Bay Area in a state court for fraudulently securing payments for services provided to members of its health plans. Aetna stated that the group of surgical centers cost it $23 million for about 1,900 procedures over the course of two years. This was $20 million more than it should have charged, according to the suit filed in Santa Clara County.

    United Healthcare Services also filed a lawsuit against Bay Area in 2012 for healthcare fraud, claiming that the company made millions of dollars by submitting inflated and fraudulent bills to the insurer.

    “Bay Area defendants have announced that they will appeal the Aetna verdict and have also filed a lawsuit against Aetna and Unitedhealthcare Services on antitrust grounds,” Wolin said.

    According to Mercury News, Bay Area Surgical Management appeared at a time when doctors were trying to find ways to compensate for the shrinking reimbursements from Medicare and private insurance companies. Outpatient surgical clinics were popular among patients in 2012 because they employed medical advances that allowed quicker, less invasive surgeries.

    “While the Bay Area verdict does not signal the end of payment for out-of-network services, it likely will embolden insurer efforts to deter patient access to out-of-network services,” Wolin said.

    In 2014, Aetna, Unitedhealthcare, Allstate and Blue Cross Blue Shield of Illinois reported losses from a $3-million scheme from the same group of people: a chiropractor, physician, billing manager, as well as three patients. In this scheme, the defendants allegedly obtained health insurance payments from various private insurers for patient services that were never rendered for more than a decade, a previous report said.

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