Insurance giant accuses hospital of $13.5 million scam

Insurer says US hospital has been billing for work it never performed

Insurance giant accuses hospital of $13.5 million scam

Life & Health

By Ryan Smith

Health insurance giant Anthem Blue Cross is threatening to sue a California hospital, claiming it perpetrated an insurance scam that resulted in more than $13.5 million in improper payments.

Earlier this month, Anthem sent a letter to Sonoma West Medical Center and Palm Drive Healthcare District, demanding repayment and threatening legal action. According to Anthem, the hospital “appears to have conspired with several third parties to fabricate or misrepresent claims for toxicology testing services that were improperly billed to Anthem.”

Sonoma West Medical Center and district officials said they had done nothing wrong and were preparing a response to the insurer, according to a report by The Press Democrat.

According to Anthem, the fraudulent billing began after the hospital partnered with Durall Capital Holdings, a Florida company, and Durall’s testing laboratory, Reliance Laboratory Testing. In exchange for more than $2 million, the cash-strapped hospital agreed to conduct toxicology testing for Durall.

Anthem claimed that when healthcare providers from around the country sent specimens to Reliance for testing, Reliance would then distribute those specimens to various labs for screening, including a lab at Sonoma West, according to The Press Democrat.

“Sonoma West bills Anthem for some or all of this testing – representing that it had performed the services, when, in fact, it had not,” Anthem’s letter said.

The letter also pointed out that as a hospital, Sonoma West “receives substantially higher amounts for urine drug testing, often 10 times or more, relative to the lesser amount” that clinical laboratories like Reliance would receive.

“Indeed, it is that reimbursement delta that appears to be the only value that Sonoma West brings to its partners in the scheme,” Anthem said.

Sonoma West, for its part, insisted that it had done nothing wrong.

“We dispute the assertions in the letter, and a response to Anthem is being prepared to address their concerns,” said John Peleuses, CEO of Sonoma West.


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