A NEW DEFENSE OF OUT-PATIENT SUITS

                                                                                 

Denis Paul Juge

Juge, Napolitano, Guilbeau, Ruli, Frieman & Whiteley

 

The same group of attorneys who have made $ millions suing employers in the PPO litigation have found a new angle - seeking recovery in the OWC for hospitals and ambulatory surgery facilities for alleged “underpayments” of outpatient bills in addition to penalties and attorney fees.  The fee schedule provides a list of approved charges for providers under the CPT codes.  In-patient hospital bills (involving two or more days of hospitalization) are limited to the specific per diem established in the fee schedule.  Out-patient services of hospitals and ambulatory surgical facilities were assumed to be less expensive than the same services for in-patient care and were set in the fee schedule to be paid based on 90% of the “billed charges”.  Over the years since the fee schedule was established the employers, insurers, and TPAs have discovered that these outpatient billings have often exceeded what would be paid if the treatment were provided in-patient.  They attempted to control these costs either with PPO contracts (which no one is using now due to the PPO litigation) or by having a fee review company apply “usual and customary” charges to compare the bill to the charges of other facilities in the area.  After realizing the Bonanza they collected in the PPO litigation, the attorneys for the hospitals and ambulatory surgery facilities have filed hundreds of suits against the employers demanding payment of the 90% of billed charges plus penalties and attorney fees.  Our defense in these cases has been to point out that the billed charges must be “reasonable” and that the reduction in the payment was what the “usual and customary” charges are for the area.  The problem with this defense is that we must convince the judge that the data used by the fee review company was valid and the attorney for the providers have had a field day attacking the data used by the fee review company.

 

I have developed an alternative defense which includes the potential benefit of giving us a claim against the hospitals and ambulatory facilities for overpayments the payor has made for the past three years.

 

The following facts are from an actual case that we are defending and is a perfect example of this new theory of defense.  In this case the physician ordered a CT scan of the head.  At the time of this request the TPA utilized a service (“one-call”) to find a diagnostic facility in the area.  However, the physician wanted to use the hospital’s CT scan.  They were advised that this was an out of network facility and the employer would only pay $750 (the maximum amount in the WC statute for unauthorized treatment).  The hospital sent a bill for $1,220.75.  90% of the”billed charges” would be $1,098.67.  The attorney for the hospital filed suit in the OWC to recover the “underpayment” ($348.67) plus penalties and attorney fees.  My original thought was to argue that we had the right to select the diagnostic facility since the Circuit Court in this area has not ruled on that issue.  However, I realized that the real issue was whether the “billed charges” were REASONABLE.  Who has the burden of proof (I think the hospital has that burden) and what would be the correct charge if the CT scan was done at a diagnostic facility instead of the hospital?  I discussed this question with the fee review company and was told that if this same service was done at a diagnostic facility the fee schedule would provide for the payment of only $461.

 

It is my contention that a “reasonable” charge for these services is already established in the fee schedule and we don’t need to have a fee review company applying their “usual and customary” analysis.

 

Thus, in this case I believe we have a claim against the hospital for OVERPAYMENT in the amount of $289.

 

If I am correct in this analysis we can also demand from this hospital repayment of all similar overpayments for the past three years.

 

I am also urging employers to consider having a review of similar outpatient billings (diagnostic services, physical therapy, lab work).  We should also consider similar claims against all other hospitals that have sued the employer for outpatient “underpayments”.  At the very least, I suggest that they will not be filing any new suits against these employers.

 

 

 

If you have any questions please feel free to contact me. 

 

 

 

 

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