Anthem Blue Cross accuses California hospital of $13.5M billing scheme: 9 things to know

Anthem Blue Cross is accusing Sonoma West Medical Center and the hospital's owner, Palm Drive Health Care District, both in Sebastopol, Calif., of fraudulently billing for toxicology testing services, according to The Press Democrat.

Here are nine things to know.

1. The insurance giant sent a letter to both entities Feb. 9, threatening to take legal action if it was not paid back the alleged $13.5 million it lost in fraudulent toxicology payments to SWMC.

2. In the letter, Anthem said the hospital "appears to have conspired with several third parties to fabricate or misrepresent claims for toxicology testing services that were improperly billed to Anthem," according to the report.

3. The Anthem letter specifically links the issue to SWMC's partnership with Durall Capital Holdings, a Sunrise, Fla.-based hospital and laboratory operator. Durall began managing the hospital's laboratory services in 2017. The hospital entered the partnership as a way to avoid closure. Durall provided the hospital with millions in capital funding in exchange for toxicology testing services, according to the report. Durall's testing lab, Reliance Laboratory Testing, passes on samples of patients' specimens to the hospital for testing.

"Reliance Labs keeps a portion of the specimen and conducts testing on it, while purportedly passing on a portion of the sample to Sonoma West for additional testing," Anthem's letter reads, according to the report. "Sonoma West bills Anthem for some or all of this testing — representing that it had performed the services when, in fact, it had not."

4. John Peleuses, CEO of SWMC, told The Press Democrat the partnership has been financially beneficial for his organization, and denied allegations of improper billing.

5. Mr. Peleuses told Becker's Hospital Review via email Feb. 21: "Our governing board is meeting in closed session later this week to discuss our response. I am not able to respond prior to the meeting.  I will say that we do not agree with the assertions."

6. Alanna Brogan, executive director of the Palm Drive Health Care District, echoed Mr. Peleuses, telling The Press Democrat, "There are a number of inaccuracies in the letter and we will be responding to Anthem."

7. Anthem asked the hospital and district to respond by Feb. 23. The insurance giant also asked for information about the hospital's toxicology testing arrangement and its contracts with Durall Capital, Reliance Labs and other entities, among various other information requests, according to the report.

8. Anthem spokesperson Suzanne Meraz declined Becker's Hospital Review's request for comment.

9. On Feb. 22, Allen Maines, an attorney with Atlanta law firm Holland & Knight, who represents the hospital and district, notified Anthem the entities received the letter and planned to respond prior to Feb. 23 as requested. The hospital confirmed Feb. 26 it has provided the four items of documentation requested in the Anthem letter.


More articles on legal and regulatory issues:

Ex-director of finance pleads guilty to stealing $3M from North Carolina hospital
Former CFO sues Chicago hospital to recoup $100k loan
Scripps will pay $1.5M to settle billing fraud case


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