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Insurers sue fraudsters | Zalma on insurance



Doctors cheat insurers for Covid testing

Healthcare providers created fraudulent billing for Covid Instant Tests

Watch the full video at https://rumble.com/v1ll4ep-insurer-sues-fraudsters.html and at https://youtu.be/VXSzxoNxEgc

IN OPEN MRI AND IMAGING OF RP VESTIBULAR DIAGNOSTICS, PA v. HORIZON BLUE CROSS BLUE SHIELD OF NEW JERSEY, Civil no. 21-10991 (WJM), United States District Court, D. New Jersey (September 19, 2022) insurer sued for failure to pay bills that were cross-claimed

for fraud claims and violations of the New Jersey Insurance Frauds Prevent Act (IFPA).

Open MRI and Imaging of RP Vestibular Diagnostics, PA sued Horizon Blue Cross Blue Shield of New Jersey (“Horizon”) for violation of the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 USC § 1001 a seq.based on Horizon’s alleged failure to pay insurance claims for covid-19 rapid testing.

Horizon’s operative pleading, which the court refers to as the Second Amended Consolidated Counterclaim and Third-Party Complaint, alleges twelve counts for violations of the common law and the New Jersey Insurance Fraud Prevention Act, NJSA 17:33A-1, a seq., based on an alleged plan to defraud Horizon. Horizon brings its claims against Plaintiff/Counter-Defendant Open MRI et al (collectively, the “Third Party Defendants”).

BACKGROUND

Horizon is an insurance company with its principal operations in Newark, New Jersey. It provides health care benefits to insured subscribers under a variety of health care plans and policies issued or administered throughout the state.

Open MRI and others are medical practices all located in Rochelle Park, New Jersey.

The alleged program to cheat Horizon

In April 2020, as the new COVID-19 virus spread across the United States, the Open began offering rapid COVID-19 testing to the public at their common practice location. Overall, these rapid test “encounters” at Open MRI, as reported by Horizon members, were very brief, lasting no longer than five minutes and involving little or no interaction with a licensed physician. Open MRI charged patients $35 at the time of service and then submitted claims to Horizon for additional payment.

To file a health insurance claim, health care providers must complete standard billing forms. The billing forms require providers to use specific numeric codes that describe the services for which the provider is requesting payment. Federal regulations specify standard coding systems that providers use to ensure that health insurance claims are processed efficiently and consistently. In turn, insurers like Horizon rely on providers to enter codes that most appropriately and accurately describe the services provided to patients so that the insurer can determine claims and secure reimbursement in accordance with the patient’s health benefit plan.

According to Horizon, from April 2020 onward, the cross-defendants filed insurance claims seeking grossly inflated billing fees for medical services that were performed illegally or not performed at all, and that were unnecessary or inappropriate for administering rapid COVID-19 tests.

Billing for services performed illegally

From April 2020 through September 2020, the cross-defendants were not certified as “Authorized Laboratories” under the Comprehensive Laboratory Improvement Act (“CLIA”) and therefore were not allowed to administer rapid COVID-19 tests. Nonetheless, the cross-defendants administered rapid COVID-19 tests to patients and then submitted claims to Horizon for reimbursement. Horizon ultimately paid more than $140,000, and those claims were for services performed illegally.

Billing for services that were not performed

Each time the respondents submitted a request for a rapid covid-19 test performed on a Horizon member, they also billed for “specimen handling,” which requires the sample collected for testing to be transferred from the provider’s office to a laboratory. However, rapid covid-19 tests do not require the transfer of patients’ samples to a laboratory for testing because they are “point of care” tests performed in the provider’s office. Yet the cross-defendants knowingly filed claims for “sample handling services” that never occurred and were unnecessary to administer rapid tests. Horizon collectively paid them more than $7,000 for those claims.

In addition, each time the cross-defendants filed a claim for a rapid covid-19 test performed on a Horizon member, they billed for moderate- and high-level evaluation and management (“E&M”) services. These mid-level and high-level E&M billing codes should be used where a healthcare provider spends thirty to sixty minutes face-to-face with a patient, takes a detailed medical history and performs a detailed examination, and uses low, moderate, or high complexity medical decision making. Although Horizon members’ minute-long appointments for a rapid covid-19 test involved only a temperature check, a few “pre-screening” questions and a nasal swab, Cross Defended still billed Horizon for more substantial E&M services that were not actually rendered. Horizon collectively paid them over $300,000 for these claims.

Horizon’s Claims Against the Third-Party Defendants

Horizon asserts twelve causes of action against the third-party defendants, all involving illegal or fraudulent billing.

DISCUSSION

A claim for common law fraud is similar to a private action brought by an insurance company under the IFPA, but because the IFPA New Jersey Insurance Frauds Prevent Act (IFPA) is broader than common law fraud, plaintiffs are required to establish fewer elements when alleging fraud in violation of the statute. Unlike common law fraud, IFPA does not require proof of reliance on the false statement or resulting damages, nor proof of intent to mislead. A plaintiff need only establish that (1) the defendant presented false or misleading information in connection with filing an insurance claim; (2) the defendant knew the information was false or misleading; and (3) information was material to a claim for compensation under an insurance policy.

Horizon has pleaded for extensive details of the who, what, when, where and how of the underlying fraudulent scheme to state a claim for common law fraud and breach of the IFPA.

ZALMA Opinion

Horizon should be commended for using the IFPA to defeat fraud related to alleged covid-19 tests and medical treatment that was neither performed nor necessary. The group of testers and doctors had the guts to sue for payment of claims they new or should have known were not appropriate, were provided by unlicensed professionals and were inflated billing for 30 minutes face to face with a patient when they never spent more than 5 minutes if ever at all. Fraud will only be defeated or deterred if the profit interest is taken from the act and hopefully the evidence gathered in this civil action is also evidence of multiple crimes.

(c) 2022 Barry Zalma & ClaimSchool, Inc.

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Barry Zalma, Esq., CFE, now limits his practice to serving as an insurance consultant specializing in insurance coverage, insurance claims management, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims attorney and more than 54 years in the insurance industry. He can be reached at http://www.zalma.com and zalma@zalma.com. Subscribe and receive videos limited to Excellence in Claims Handling subscribers at locals.com https://zalmaoninsurance.locals.com/subscribe.Subscribe to Excellence in Claims Handling at https://barryzalma.substack.com/welcome. Now available Barry Zalma’s latest book, Bad faith damages, available here. The new book is available as a Kindle book, paperback or as a hardcover.

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