Two officials at Hospital Partners Inc. - David Byrns and Jorge Perez - have filed a motion to dismiss a civil lawsuit in the U.S. District court, St. Joseph division.
The 18-page document was filed Aug. 14 against RightCHOICE Managed Care Inc., owned by Anthem.
The document lists Chillicothe attorney Lauren A. Horsman representing Byrns, Perez and their company, Hospital Partners Inc. She said Wednesday she was not going to make any comments regarding the motion.
This motion is in response to a lawsuit filed earlier by James and Phyllis Shaffer, of Mission Hills, Kansas, which was covered by the Fulton Sun on Aug. 14. They are suing over what they say were replays of the original billing scheme found at Putnam County Memorial Hospital.
On the eighth page of the motion to dismiss, attorneys for Byrns and Perez allege: "It is entirely unclear not only what wrongdoing is alleged against each of these defendants, but where such wrongdoing is alleged to have occurred. It is also unclear as to the connections of these defendants to Missouri."
After an investigation by state Auditor Nicole Galloway started last year, details of the findings were sent to the state attorney general Josh Hawley's office in May. Officials there also opened an investigation into the firm.
"It is an ongoing investigation," the office's Communications Director Mary Compton said Tuesday.
In May, U.S. Sen. Claire McCaskill called for a federal investigation into the billing arrangements.
"We're still pressing for a federal investigation, and will be sure to keep you in the loop as far as any updates or developments that come on that front," said Jonas Edwards-Jenks, McCaskill's press secretary.
He said Monday that McCaskill asked the inspector general of the U.S. Department of Health and Human Services to investigate hospital billing practices.
"As of now, DHHS hasn't announced (an investigation)," he added.
A DHHS spokeswoman said that department's policy is to neither confirm nor deny open investigations.
Local connection
Perez is listed as CEO of EmpowerHMS, based at 1700 Swift Ave. in North Kansas City, Missouri. He appeared with others at a gathering at Fulton City Hall and said he was purchasing Fulton Memorial Hospital. Since then, no evidence exists that he ever purchased it, and instead, company officials later said they were managing the local facility.
No one answered the phone number provided on the EmpowerHMS website, but a recording stated it was "Rural Community Hospitals of America." An online directory of employees did not include Jorge Perez.
Hospital Partners Inc., another company controlled by Byrns and Perez, is being investigated on accusations of fraudulent billing procedures. Perez is part owner of that company and is listed as vice president, treasurer and director of Hospital Partners Inc., according to the company's 2017 annual report filed with the Florida Secretary of State. The president, secretary and director of Hospital Partners is Byrns.
As previously reported by the Fulton Sun
In September 2016, the Putnam County Hospital Board hired Byrns and Hospital Partners Inc., to take over management of the hospital.
On Aug. 9, 2017, Galloway released an audit of Putnam County Memorial Hospital - a 14-bed facility in Unionville. She said her office uncovered $90 million in inappropriate lab billings by hospital leadership and associates.
Within a day, Hospital Parners Inc. released a statement defending its practices.
Galloway announced a follow up audit in February. A July 11 report stated the hospital had terminated its agreement with Hospital Partners Inc. Galloway's report stated: "Our audit revealed a billing scheme that we now know extends well beyond Putnam County Memorial Hospital, and could impact health care costs for all of us." (See: app.auditor.mo.gov/Repository/Press/2018045134671.pdf)
Galloway stated a billing scheme was uncovered in which the lab services company, also owned by Byrns and Hospital Lab Partners LLC, conducted lab work across the country. The audit said Hospital Lab Partners billed lab work through Putnam County Memorial Hospital to insurance companies using the hospital's account. In exchange, Galloway said, the hospital would receive a cut of the insurance payouts.
The hospital received more than $90 million since November 2016, passing most of the money along to Byrns' lab company and its affiliates, Galloway stated.
"However, during this time, the vast majority of billings were for patients who had never been to or received services from Putnam County Memorial Hospital," the audit release said. "Instead, the hospital submits the bills for their services to the insurance companies, funneling millions of dollars through the hospital and reducing it to what is essentially a shell organization for labs across the country."
Galloway also said the hospital paid more than $10 million in lab management fees.
According to Missouri Casenet, CBS News and other news sources, Hospital Partners Inc. filed a counter lawsuit against Galloway in Putnam County Circuit Court in late March. That lawsuit lists the address for Hospital Partners at 1700 Swift St. in Kansas City, Missouri.
This lawsuit claims Hospital Partners Inc. was illegally booted out of the management role at Putnam County hospital and it is seeking $2 million in damages from the hospital's board of trustees and Galloway. The board of the directors of Putnam Memorial is being represented by attorney Joe Bednar, who verified the hospital was being sued by Hospital Partners Inc.
"There's nothing simple about the issues presented," he said at the time of the complex situation. "We're now getting sued by them."
On June 13, this case was transferred to Cole County Circuit Court. No activity since then is reported on Casenet.
Other billing practices by Hospital Partners Inc. and associated companies have also been questioned. Other legal action includes:
James and Phyllis Shaffer of Mission Hills, Kansas, suing over what they say were replays of the original billing scheme found at Putnam County Memorial Hospital. The Shaffers are shareholders in a company that owns 20 percent of 10 hospitals, HMC Hospitals, that operates four facilities in Kansas and Missouri. They claim Perez and others seized control of HMC Hospitals and implemented a billing scheme similar to that at Putnam.
A federal lawsuit in Georgia, reported in April, filed by Blue Cross and Blue Shield, of Georgia. This suit alleges, since August 2016, a 49-bed rural hospital, Chestatee Regional Hospital in Dahlonega, Georgia, has billed them more than $174 million for lab tests Blue Cross did not agree to pay for. According to a story filed by KCUR 89.3 (kcur.org/post/would-be-savior-missouri-kansas-hospitals-accused-wider-fraudulent-scheme#stream/0), the Georgia lawsuit stated Perez and other defendants billed for lab tests as if they had been performed at and by Chestatee Regional Hospital to take advantage of its favorable reimbursement rates from Blue Cross and Blue Shield of Georgia.
NPR reported on July 3 several other insurance companies in Georgia are suing Perez, seeking to recoup more than $111 million. (See n.pr/2tWlhjN)
Blue Cross Blue Shield, of Oklahoma, raised questions about a similar billing arrangement with four rural hospitals in that state controlled by Perez. As of February, those hospitals are no longer included in Blue Cross's network.
According to KBIA 91.3, Byrns was CEO of a company called Frontier Hospitals that took over management of a struggling 25-bed hospital in Louisiana in 2011. That deal went south after the hospital evicted Frontier and obtained a judgment for $200,000. The Louisiana hospital later pressed criminal charges against Byrns in Calcasieu Parish, Louisiana, for allegedly altering a $30,000 check from the hospital to read $130,000. (See bit.ly/2MjJxYo).