Massive billing scheme spread to 10-hospital group, lawsuit alleges

A $90 million billing fraud scheme highlighted in a state audit of a 15-bed Missouri hospital spread to as many as 10 other hospitals, according to The Kansas City Star, which cited a federal complaint.

Here are five things to know:

1. James and Phyllis Shaffer, who are part owners of a 10-hospital group called HMC Hospitals, filed the lawsuit against several individuals they claim carried out a billing fraud scheme.

2. They allege Jorge Perez and others orchestrated a fraud scheme involving HMC Hospitals using the same questionable billing practices Mr. Perez allegedly rolled out at Putnam County Memorial Hospital in Unionville, Mo.

3. A 2017 report by Missouri State Auditor Nicole Galloway highlighted the alleged billing fraud scheme at Putnam County Memorial. Mr. Perez and others allegedly used pass-through billing for laboratory services to generate $92 million in revenue for the critical access hospital in six months. The auditor claimed Putnam County Memorial Hospital acted as a shell company by submitting claims for other labs and funneling the insurance payments through the hospital.

4. The Shaffer's lawsuit alleges Mr. Perez was the CEO of a company hired to manage HMC Hospitals' facilities. After taking control, Mr. Perez's company allegedly implemented an illegal billing scheme at some of the hospitals that was "substantially similar to the scheme" being operated at Putnam County Memorial, the lawsuit alleges.

5. Mr. Perez and all other defendants named in the lawsuit are represented by counsel and claim the allegations are meritless, according to The Kansas City Star.

Access the full Kansas City Star article here.

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