Cigna Sues California's Bay Area Surgical Management, Alleging $66M in Overbilling

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Cigna Health and Life Insurance sued a group of California surgical practices on Friday, alleging that the practices fraudulently schemed to overbill the payor and the ERISA plans it administers by at least $66 million, according to a Law 360 report.

Cigna filed the complaint in the Northern District of California, naming Bay Area Surgical Management, six San Francisco surgical centers and three BASM co-founders as defendants.

The complaint alleged that the defendants, who are not in-network with Cigna, recruit physicians to invest in their ASCs and require the physicians to refer a stream of Cigna-insured patients to the centers. According to the complaint, the centers allegedly overbilled the payor for routine medical treatments and then paid kickbacks to the participating physicians. The centers allegedly did not charge co-payments or deductibles, which patients are supposed to pay when seeking out-of-network care.

According to the lawsuit, the surgery center promises its physician investors returns of up to 800 percent a year. This means that the surgical centers are allegedly only able to pay the physicians by requiring them to refer patients to their own surgical centers. According to the report, these actions violate California law, as the owners are providing kickbacks to the physicians for referring patients and submitting false claims to insurers.

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