Aetna Life Insurance Company (Aetna) is going on the offensive against a Northwest Houston hospital with an out-of-network strategy. On February 23, 2015, Aetna filed suit in Texas federal court against Robert A. Behar, M.D. and North Cypress Medical Center (North Cypress), alleging that Dr. Behar, the CEO of North Cypress, offered impermissible ownership stakes in the 139-bed community hospital in exchange for patient referrals and designed an out-of-network business strategy that gave rise to excessive fees charged to Aetna. Aetna has alleged that this conduct violates the federal Racketeer Influenced and Corruption Organizations Act (RICO), constitutes tortious interference with the physician-owners’ in-network agreements with Aetna, constitutes tortious interference with Aetna beneficiaries’ healthcare benefit plans and is a breach of North Cypress’ Participating Facility Agreement with MultiPlan, Inc., an Aetna affiliate. Aetna has also alleged that North Cypress violated numerous Texas statutory provisions concerning billing practices of medical providers in Texas, including prohibitions against improper or unreasonable medical treatment, unprofessional conduct, waiver of patient cost sharing and inappropriate payment for referrals. Despite their alleged involvement and acquiescence in North Cypress’ “fraudulent billing scheme,” none of the referring physicians to North Cypress were joined in the lawsuit.

Aetna alleges that North Cypress implemented an out-of-network strategy with four elements: illegal kickbacks to physicians disguised as ownership interests in the hospital, implementing inappropriate billing practices including an out-of-network emergency room strategy, waiver of Aetna members’ financial responsibility and charging grossly excessive fees. As a result of this scheme, Aetna asserts that it overpaid North Cypress as much as $120 million since January 1, 2009, and that North Cypress realized gross revenues that dwarf other nearby hospitals with greater inpatient bed capacity and higher patient utilization.

The complaint focuses largely on the orchestrated actions of Dr. Behar, who Aetna claims is the mastermind behind the scheme. Specifically, Aetna alleges that only physicians with significant referrals to the hospital were offered investment opportunities and that at least one physician saw more than a 2,500 percent return on her investment in fewer than five years. Dr. Behar is also alleged to have tracked the physician-owners’ referrals and exerted substantial pressure on them to continue referring patients to North Cypress or else “face dire consequences.” Aetna claims that Dr. Behar issued a “directive” requiring non-emergent patients to be admitted through the emergency room yielding higher reimbursement and avoiding Aetna’s prior authorization requirement which may have resulted in transfers to other in-network hospitals. Dr. Behar also allegedly devised plans to allow North Cypress patients to pay only the same amount of cost sharing as they would at an in-network hospital, while representing to Aetna on its claim forms that it did not waive beneficiary cost-sharing obligations.

Once North Cypress received the influx of out-of-network patients, it is alleged to have charged grossly higher fees than similar hospitals for the same or routine procedures. For instance, North Cypress is alleged to have charged five times the amount charged by other providers in the same market for simple urine tests, CT scans and routine blood work. North Cypress is further alleged to have charged excessive fees for questionable observation care. In one case, a patient was on observation care for seven full days without being admitted as an inpatient. In addition to overcharging, North Cypress is alleged to have engaged in upcoding and impermissibly billing under non-specific billing codes.

The case is Aetna Life Insurance Company v. Robert A. Behar, M.D., et al., Civil Action No. 4:15-cv-491, in the United States District Court for the Southern District of Texas, Houston Division.

The allegations made by Aetna in this lawsuit are similar to other cases filed by commercial insurers against physicians who refer to out-of-network facilities and the out-of-network hospitals receiving those referrals.