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Business litigation filed by large insurer against clinical lab

| Oct 24, 2014 | Business Litigation |

In North Carolina and all other states, business disputes seem to arise on a regular basis between health insurers and the various companies and health providers with whom they transact business. In one such case filed recently in a federal district court, Cigna Health and Life Insurance Co. is alleging that a blood-testing company owes it some $84 million  for fraudulent billing and marketing practices. Such business litigation can be a major undertaking for both companies, especially considering the exceptionally huge volume of data stored by each regarding its past transactions.

The defendant, Health Diagnostic Laboratory, Inc. is accused of engaging in a  “fraudulent fee-forgiving scheme” that consisted of not charging Cigna plan members for their co-pay owed on out-of-network diagnostic services. Cigna also charges that HDL then charged Cigna exorbitantly, through a system of phantom and grossly inflated bills that did not reflect the actual services performed. Cigna alleges that HDL thus carried out a scheme to “game” the healthcare system.

Recently, HDL changed some of its billing practices in response to federal investigators looking into the clinical lab industry’s practices. HDL has also had a recent shakeup of management with the appointment of a new CEO. The lawsuit also charges that HDL pays providers’ fees in the form of “kickbacks” for sending patients to the company for their blood test work.

Federal agencies recently announced they were investigating the practice. Kickbacks for referral business in the healthcare industry is forbidden by legislation pertaining to the Medicare and Medicaid programs. As a result of the announcement by government regulators, HDL stopped paying “process and handling” fees to referring healthcare entities.

Business litigation in North Carolina also takes place in the field of health insurance and the healthcare industry. This usually involves disputes between different entities as to the amounts being paid or reimbursed for services provided. The range of business disputes, however, goes beyond that and includes many different issues that can arise in typical transactions conducted within the industry.

Source: Richmond Times-Dispatch, “Cigna files lawsuit against Health Diagnostic Laboratory“, John Reid Blackwell, Oct. 17, 2014

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