Letter from Anthem prompts California hospital to shut down toxicology program

Sonoma West Medical Center in Sebastopol, Calif., has suspended its toxicology testing program after Anthem sent hospital leadership a letter claiming SWMC was involved in a lab testing scheme, according to Sonoma West Times & News.

Hospital leadership decided to shut down the program in late February after SWMC retained legal counsel to look into Anthem's allegations, SWMC Chief Nursing and Operating Officer Barbara Vogelsang told Sonoma West Times & News. "As our attorneys completed their fact-finding, toxicology testing services that were being performed at our hospital ceased," Ms. Vogelsang said.

In its letter to the hospital, Anthem claimed the lab testing scheme SWMC was involved in resulted in the insurer making $13.5 million in payments to the hospital. "Sonoma West appears to have conspired with several third parties to fabricate or misrepresent claims for toxicology testing services that were improperly billed to Anthem," the letter stated.

Anthem threatened to take legal action against SWMC and its owner, Sebastopol-based Palm Drive Health Care District, if the funds were not returned immediately. The insurer also said it would deny all claims for urine testing the hospital submitted as of Jan. 22, according to the report.

The alleged lab testing scheme gained national attention this week when CBS aired a special investigative report. In June 2017, the governing board of SWMC and the Palm Drive Health Care District approved a lab management agreement with Durall Capital Holdings, a Florida-based company owned by Aaron Durall. The agreement reportedly generated more than $31 million in the last eight months, according to CBS.

Ms. Vogelsang told Sonoma West Times & News the hospital is making changes to ensure proper billing moving forward. "As we have discussed in the past, we are making significant changes to our revenue cycle department. This will ensure appropriate billing and collecting for the care we provide, enabling us to continue to operate," she said.

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